Correlation Between SIDETRADE and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both SIDETRADE and AUTO TRADER 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 SIDETRADE and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIDETRADE EO 1 and AUTO TRADER ADR, you can compare the effects of market volatilities on SIDETRADE and AUTO TRADER 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 SIDETRADE with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and AUTO TRADER.
Diversification Opportunities for SIDETRADE and AUTO TRADER
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIDETRADE and AUTO is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and SIDETRADE 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 SIDETRADE EO 1 are associated (or correlated) with AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of SIDETRADE i.e., SIDETRADE and AUTO TRADER go up and down completely randomly.
Pair Corralation between SIDETRADE and AUTO TRADER
Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 0.85 times more return on investment than AUTO TRADER. However, SIDETRADE EO 1 is 1.17 times less risky than AUTO TRADER. It trades about 0.16 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.03 per unit of risk. If you would invest 22,100 in SIDETRADE EO 1 on October 23, 2024 and sell it today you would earn a total of 700.00 from holding SIDETRADE EO 1 or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
SIDETRADE EO 1 vs. AUTO TRADER ADR
Performance |
| Timeline |
| SIDETRADE EO 1 |
| AUTO TRADER ADR |
SIDETRADE and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIDETRADE and AUTO TRADER
The main advantage of trading using opposite SIDETRADE and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| SIDETRADE vs. AGRICULTBK HADR25 YC | SIDETRADE vs. Dairy Farm International | SIDETRADE vs. Chongqing Machinery Electric | SIDETRADE vs. Daito Trust Construction |
| AUTO TRADER vs. Hanison Construction Holdings | AUTO TRADER vs. Australian Agricultural | AUTO TRADER vs. GRIFFIN MINING LTD | AUTO TRADER vs. Dairy Farm International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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