Correlation Between Aages SA and Romcab SA
Can any of the company-specific risk be diversified away by investing in both Aages SA and Romcab 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 Aages SA and Romcab SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aages SA and Romcab SA, you can compare the effects of market volatilities on Aages SA and Romcab 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 Aages SA with a short position of Romcab SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aages SA and Romcab SA.
Diversification Opportunities for Aages SA and Romcab SA
Poor diversification
The 3 months correlation between Aages and Romcab is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aages SA and Romcab SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romcab SA and Aages SA 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 Aages SA are associated (or correlated) with Romcab SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romcab SA has no effect on the direction of Aages SA i.e., Aages SA and Romcab SA go up and down completely randomly.
Pair Corralation between Aages SA and Romcab SA
Assuming the 90 days trading horizon Aages SA is expected to generate 0.57 times more return on investment than Romcab SA. However, Aages SA is 1.75 times less risky than Romcab SA. It trades about -0.06 of its potential returns per unit of risk. Romcab SA is currently generating about -0.27 per unit of risk. If you would invest 700.00 in Aages SA on September 13, 2024 and sell it today you would lose (30.00) from holding Aages SA or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aages SA vs. Romcab SA
Performance |
| Timeline |
| Aages SA |
| Romcab SA |
Aages SA and Romcab SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aages SA and Romcab SA
The main advantage of trading using opposite Aages SA and Romcab SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aages SA position performs unexpectedly, Romcab 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 Romcab SA will offset losses from the drop in Romcab SA's long position.| Aages SA vs. Evergent Investments SA | Aages SA vs. Compania Hoteliera InterContinental | Aages SA vs. AROBS TRANSILVANIA SOFTWARE | Aages SA vs. Digi Communications NV |
| Romcab SA vs. IM Vinaria Purcari | Romcab SA vs. Digi Communications NV | Romcab SA vs. AROBS TRANSILVANIA SOFTWARE | Romcab SA vs. TRANSILVANIA INVESTMENTS ALLIANCE |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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