Correlation Between SIDETRADE and Auckland International
Can any of the company-specific risk be diversified away by investing in both SIDETRADE and Auckland International 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 Auckland International 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 Auckland International Airport, you can compare the effects of market volatilities on SIDETRADE and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and Auckland International.
Diversification Opportunities for SIDETRADE and Auckland International
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SIDETRADE and Auckland is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of SIDETRADE i.e., SIDETRADE and Auckland International go up and down completely randomly.
Pair Corralation between SIDETRADE and Auckland International
Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 1.98 times more return on investment than Auckland International. However, SIDETRADE is 1.98 times more volatile than Auckland International Airport. It trades about 0.11 of its potential returns per unit of risk. Auckland International Airport is currently generating about 0.13 per unit of risk. If you would invest 22,400 in SIDETRADE EO 1 on November 3, 2024 and sell it today you would earn a total of 2,100 from holding SIDETRADE EO 1 or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIDETRADE EO 1 vs. Auckland International Airport
Performance |
| Timeline |
| SIDETRADE EO 1 |
| Auckland International |
SIDETRADE and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIDETRADE and Auckland International
The main advantage of trading using opposite SIDETRADE and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| SIDETRADE vs. United Breweries Co | SIDETRADE vs. Westinghouse Air Brake | SIDETRADE vs. China Resources Beer | SIDETRADE vs. Thai Beverage Public |
| Auckland International vs. Coeur Mining | Auckland International vs. BOSTON BEER A | Auckland International vs. Calibre Mining Corp | Auckland International vs. Molson Coors Beverage |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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