Correlation Between Wool Industry and Lanakam SA
Can any of the company-specific risk be diversified away by investing in both Wool Industry and Lanakam SA 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 Wool Industry and Lanakam SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wool Industry Tria and Lanakam SA, you can compare the effects of market volatilities on Wool Industry and Lanakam SA 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 Wool Industry with a short position of Lanakam SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wool Industry and Lanakam SA.
Diversification Opportunities for Wool Industry and Lanakam SA
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wool and Lanakam is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wool Industry Tria and Lanakam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanakam SA and Wool Industry 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 Wool Industry Tria are associated (or correlated) with Lanakam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanakam SA has no effect on the direction of Wool Industry i.e., Wool Industry and Lanakam SA go up and down completely randomly.
Pair Corralation between Wool Industry and Lanakam SA
Assuming the 90 days trading horizon Wool Industry Tria is expected to under-perform the Lanakam SA. In addition to that, Wool Industry is 1.65 times more volatile than Lanakam SA. It trades about -0.02 of its total potential returns per unit of risk. Lanakam SA is currently generating about -0.01 per unit of volatility. If you would invest 102.00 in Lanakam SA on November 9, 2024 and sell it today you would lose (9.00) from holding Lanakam SA or give up 8.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 21.97% |
| Values | Daily Returns |
Wool Industry Tria vs. Lanakam SA
Performance |
| Timeline |
| Wool Industry Tria |
| Lanakam SA |
Risk-Adjusted Performance
Solid
Weak | Strong |
Wool Industry and Lanakam SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wool Industry and Lanakam SA
The main advantage of trading using opposite Wool Industry and Lanakam SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wool Industry position performs unexpectedly, Lanakam SA 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 Lanakam SA will offset losses from the drop in Lanakam SA's long position.The idea behind Wool Industry Tria and Lanakam SA 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.| Lanakam SA vs. General Commercial Industrial | Lanakam SA vs. Profile Systems Software | Lanakam SA vs. Hellenic Telecommunications Organization | Lanakam SA vs. Eurobank Ergasias Services |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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