Correlation Between ABC Arbitrage and Gecina SA
Can any of the company-specific risk be diversified away by investing in both ABC Arbitrage and Gecina 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 ABC Arbitrage and Gecina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABC arbitrage SA and Gecina SA, you can compare the effects of market volatilities on ABC Arbitrage and Gecina 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 ABC Arbitrage with a short position of Gecina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC Arbitrage and Gecina SA.
Diversification Opportunities for ABC Arbitrage and Gecina SA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ABC and Gecina is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ABC arbitrage SA and Gecina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gecina SA and ABC Arbitrage 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 ABC arbitrage SA are associated (or correlated) with Gecina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gecina SA has no effect on the direction of ABC Arbitrage i.e., ABC Arbitrage and Gecina SA go up and down completely randomly.
Pair Corralation between ABC Arbitrage and Gecina SA
Assuming the 90 days trading horizon ABC arbitrage SA is expected to generate 1.19 times more return on investment than Gecina SA. However, ABC Arbitrage is 1.19 times more volatile than Gecina SA. It trades about 0.05 of its potential returns per unit of risk. Gecina SA is currently generating about -0.25 per unit of risk. If you would invest 472.00 in ABC arbitrage SA on August 28, 2024 and sell it today you would earn a total of 6.00 from holding ABC arbitrage SA or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABC arbitrage SA vs. Gecina SA
Performance |
| Timeline |
| ABC arbitrage SA |
| Gecina SA |
ABC Arbitrage and Gecina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABC Arbitrage and Gecina SA
The main advantage of trading using opposite ABC Arbitrage and Gecina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABC Arbitrage position performs unexpectedly, Gecina 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 Gecina SA will offset losses from the drop in Gecina SA's long position.| ABC Arbitrage vs. CBO Territoria SA | ABC Arbitrage vs. Rubis SCA | ABC Arbitrage vs. Nexity | ABC Arbitrage vs. Gaztransport Technigaz SAS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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