Correlation Between All American and First Colombia
Can any of the company-specific risk be diversified away by investing in both All American and First Colombia 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 All American and First Colombia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All American Gld and First Colombia Gold, you can compare the effects of market volatilities on All American and First Colombia 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 All American with a short position of First Colombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and First Colombia.
Diversification Opportunities for All American and First Colombia
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between All and First is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding All American Gld and First Colombia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Colombia Gold and All American 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 All American Gld are associated (or correlated) with First Colombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Colombia Gold has no effect on the direction of All American i.e., All American and First Colombia go up and down completely randomly.
Pair Corralation between All American and First Colombia
Given the investment horizon of 90 days All American is expected to generate 23.64 times less return on investment than First Colombia. But when comparing it to its historical volatility, All American Gld is 10.86 times less risky than First Colombia. It trades about 0.08 of its potential returns per unit of risk. First Colombia Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.03 in First Colombia Gold on August 29, 2024 and sell it today you would lose (0.02) from holding First Colombia Gold or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
All American Gld vs. First Colombia Gold
Performance |
| Timeline |
| All American Gld |
| First Colombia Gold |
All American and First Colombia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All American and First Colombia
The main advantage of trading using opposite All American and First Colombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All American position performs unexpectedly, First Colombia 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 First Colombia will offset losses from the drop in First Colombia's long position.| All American vs. Rimrock Gold Corp | All American vs. V Group | All American vs. Indo Global Exchange | All American vs. KYN Capital Group |
| First Colombia vs. Icon Media Holdings | First Colombia vs. Mining Global | First Colombia vs. Eline Entertainment Group | First Colombia vs. Intl Star |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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