Correlation Between Tomra Systems and Associated British
Can any of the company-specific risk be diversified away by investing in both Tomra Systems and Associated British at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tomra Systems and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tomra Systems ASA and Associated British Foods, you can compare the effects of market volatilities on Tomra Systems and Associated British and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tomra Systems with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tomra Systems and Associated British.
Diversification Opportunities for Tomra Systems and Associated British
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tomra and Associated is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tomra Systems ASA and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Tomra Systems is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tomra Systems ASA are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Tomra Systems i.e., Tomra Systems and Associated British go up and down completely randomly.
Pair Corralation between Tomra Systems and Associated British
Assuming the 90 days trading horizon Tomra Systems ASA is expected to generate 2.25 times more return on investment than Associated British. However, Tomra Systems is 2.25 times more volatile than Associated British Foods. It trades about 0.04 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.02 per unit of risk. If you would invest 12,490 in Tomra Systems ASA on September 14, 2024 and sell it today you would earn a total of 2,450 from holding Tomra Systems ASA or generate 19.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.0% |
| Values | Daily Returns |
Tomra Systems ASA vs. Associated British Foods
Performance |
| Timeline |
| Tomra Systems ASA |
| Associated British Foods |
Tomra Systems and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tomra Systems and Associated British
The main advantage of trading using opposite Tomra Systems and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tomra Systems position performs unexpectedly, Associated British can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Associated British will offset losses from the drop in Associated British's long position.| Tomra Systems vs. Associated British Foods | Tomra Systems vs. Fonix Mobile plc | Tomra Systems vs. Bloomsbury Publishing Plc | Tomra Systems vs. Tyson Foods Cl |
| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Hyundai Motor | Associated British vs. Toyota Motor Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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