Correlation Between AB SA and Cloud Technologies
Can any of the company-specific risk be diversified away by investing in both AB SA and Cloud Technologies 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 AB SA and Cloud Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SA and Cloud Technologies SA, you can compare the effects of market volatilities on AB SA and Cloud Technologies 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 AB SA with a short position of Cloud Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SA and Cloud Technologies.
Diversification Opportunities for AB SA and Cloud Technologies
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABE and Cloud is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AB SA and Cloud Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Technologies and AB 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 AB SA are associated (or correlated) with Cloud Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Technologies has no effect on the direction of AB SA i.e., AB SA and Cloud Technologies go up and down completely randomly.
Pair Corralation between AB SA and Cloud Technologies
Assuming the 90 days trading horizon AB SA is expected to generate 0.75 times more return on investment than Cloud Technologies. However, AB SA is 1.33 times less risky than Cloud Technologies. It trades about 0.09 of its potential returns per unit of risk. Cloud Technologies SA is currently generating about -0.03 per unit of risk. If you would invest 7,117 in AB SA on November 5, 2024 and sell it today you would earn a total of 3,983 from holding AB SA or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB SA vs. Cloud Technologies SA
Performance |
| Timeline |
| AB SA |
| Cloud Technologies |
AB SA and Cloud Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SA and Cloud Technologies
The main advantage of trading using opposite AB SA and Cloud Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SA position performs unexpectedly, Cloud Technologies 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 Cloud Technologies will offset losses from the drop in Cloud Technologies' long position.| AB SA vs. Creotech Instruments SA | AB SA vs. Medicalg | AB SA vs. Ultimate Games SA | AB SA vs. Mlk Foods Public |
| Cloud Technologies vs. Ailleron SA | Cloud Technologies vs. Santander Bank Polska | Cloud Technologies vs. Asseco South Eastern | Cloud Technologies vs. Vercom SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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