Correlation Between Schweiter Technologies and Carnival PLC
Can any of the company-specific risk be diversified away by investing in both Schweiter Technologies and Carnival PLC 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 Schweiter Technologies and Carnival PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweiter Technologies AG and Carnival PLC, you can compare the effects of market volatilities on Schweiter Technologies and Carnival PLC 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 Schweiter Technologies with a short position of Carnival PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweiter Technologies and Carnival PLC.
Diversification Opportunities for Schweiter Technologies and Carnival PLC
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Schweiter and Carnival is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Schweiter Technologies AG and Carnival PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival PLC and Schweiter Technologies 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 Schweiter Technologies AG are associated (or correlated) with Carnival PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival PLC has no effect on the direction of Schweiter Technologies i.e., Schweiter Technologies and Carnival PLC go up and down completely randomly.
Pair Corralation between Schweiter Technologies and Carnival PLC
Assuming the 90 days trading horizon Schweiter Technologies AG is expected to generate 0.96 times more return on investment than Carnival PLC. However, Schweiter Technologies AG is 1.04 times less risky than Carnival PLC. It trades about -0.03 of its potential returns per unit of risk. Carnival PLC is currently generating about -0.34 per unit of risk. If you would invest 47,100 in Schweiter Technologies AG on November 29, 2024 and sell it today you would lose (700.00) from holding Schweiter Technologies AG or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schweiter Technologies AG vs. Carnival PLC
Performance |
| Timeline |
| Schweiter Technologies |
| Carnival PLC |
Schweiter Technologies and Carnival PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweiter Technologies and Carnival PLC
The main advantage of trading using opposite Schweiter Technologies and Carnival PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweiter Technologies position performs unexpectedly, Carnival PLC 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 Carnival PLC will offset losses from the drop in Carnival PLC's long position.The idea behind Schweiter Technologies AG and Carnival PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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