Correlation Between Flow Traders and Induction Healthcare
Can any of the company-specific risk be diversified away by investing in both Flow Traders and Induction Healthcare 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 Flow Traders and Induction Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Traders NV and Induction Healthcare Group, you can compare the effects of market volatilities on Flow Traders and Induction Healthcare 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 Flow Traders with a short position of Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Traders and Induction Healthcare.
Diversification Opportunities for Flow Traders and Induction Healthcare
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flow and Induction is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders NV and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare and Flow Traders 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 Flow Traders NV are associated (or correlated) with Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Flow Traders i.e., Flow Traders and Induction Healthcare go up and down completely randomly.
Pair Corralation between Flow Traders and Induction Healthcare
Assuming the 90 days trading horizon Flow Traders NV is expected to generate 0.53 times more return on investment than Induction Healthcare. However, Flow Traders NV is 1.9 times less risky than Induction Healthcare. It trades about 0.05 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.08 per unit of risk. If you would invest 1,749 in Flow Traders NV on September 12, 2024 and sell it today you would earn a total of 359.00 from holding Flow Traders NV or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Flow Traders NV vs. Induction Healthcare Group
Performance |
| Timeline |
| Flow Traders NV |
| Induction Healthcare |
Flow Traders and Induction Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flow Traders and Induction Healthcare
The main advantage of trading using opposite Flow Traders and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders position performs unexpectedly, Induction Healthcare 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 Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.| Flow Traders vs. Coeur Mining | Flow Traders vs. Anglesey Mining | Flow Traders vs. National Beverage Corp | Flow Traders vs. Beowulf Mining |
| Induction Healthcare vs. Roebuck Food Group | Induction Healthcare vs. Axfood AB | Induction Healthcare vs. Virgin Wines UK | Induction Healthcare vs. Intuitive Investments Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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