Correlation Between GOODTECH ASA and VARIOUS EATERIES
Can any of the company-specific risk be diversified away by investing in both GOODTECH ASA and VARIOUS EATERIES 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 GOODTECH ASA and VARIOUS EATERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODTECH ASA A and VARIOUS EATERIES LS, you can compare the effects of market volatilities on GOODTECH ASA and VARIOUS EATERIES 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 GOODTECH ASA with a short position of VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODTECH ASA and VARIOUS EATERIES.
Diversification Opportunities for GOODTECH ASA and VARIOUS EATERIES
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GOODTECH and VARIOUS is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES and GOODTECH ASA 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 GOODTECH ASA A are associated (or correlated) with VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of GOODTECH ASA i.e., GOODTECH ASA and VARIOUS EATERIES go up and down completely randomly.
Pair Corralation between GOODTECH ASA and VARIOUS EATERIES
Assuming the 90 days horizon GOODTECH ASA A is expected to generate 1.2 times more return on investment than VARIOUS EATERIES. However, GOODTECH ASA is 1.2 times more volatile than VARIOUS EATERIES LS. It trades about 0.0 of its potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about -0.11 per unit of risk. If you would invest 86.00 in GOODTECH ASA A on August 31, 2024 and sell it today you would lose (9.00) from holding GOODTECH ASA A or give up 10.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
GOODTECH ASA A vs. VARIOUS EATERIES LS
Performance |
| Timeline |
| GOODTECH ASA A |
| VARIOUS EATERIES |
GOODTECH ASA and VARIOUS EATERIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODTECH ASA and VARIOUS EATERIES
The main advantage of trading using opposite GOODTECH ASA and VARIOUS EATERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODTECH ASA position performs unexpectedly, VARIOUS EATERIES 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 VARIOUS EATERIES will offset losses from the drop in VARIOUS EATERIES's long position.| GOODTECH ASA vs. Take Two Interactive Software | GOODTECH ASA vs. FORMPIPE SOFTWARE AB | GOODTECH ASA vs. Verizon Communications | GOODTECH ASA vs. Rogers Communications |
| VARIOUS EATERIES vs. McDonalds | VARIOUS EATERIES vs. Starbucks | VARIOUS EATERIES vs. Compass Group PLC | VARIOUS EATERIES vs. Yum Brands |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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