Correlation Between Abak SA and Kool2play
Can any of the company-specific risk be diversified away by investing in both Abak SA and Kool2play 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 Abak SA and Kool2play into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abak SA and Kool2play SA, you can compare the effects of market volatilities on Abak SA and Kool2play 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 Abak SA with a short position of Kool2play. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abak SA and Kool2play.
Diversification Opportunities for Abak SA and Kool2play
Modest diversification
The 3 months correlation between Abak and Kool2play is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Abak SA and Kool2play SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kool2play SA and Abak 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 Abak SA are associated (or correlated) with Kool2play. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kool2play SA has no effect on the direction of Abak SA i.e., Abak SA and Kool2play go up and down completely randomly.
Pair Corralation between Abak SA and Kool2play
Assuming the 90 days trading horizon Abak SA is expected to under-perform the Kool2play. But the stock apears to be less risky and, when comparing its historical volatility, Abak SA is 2.0 times less risky than Kool2play. The stock trades about -0.79 of its potential returns per unit of risk. The Kool2play SA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Kool2play SA on August 28, 2024 and sell it today you would lose (7.00) from holding Kool2play SA or give up 7.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 40.0% |
| Values | Daily Returns |
Abak SA vs. Kool2play SA
Performance |
| Timeline |
| Abak SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kool2play SA |
Abak SA and Kool2play Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abak SA and Kool2play
The main advantage of trading using opposite Abak SA and Kool2play positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abak SA position performs unexpectedly, Kool2play 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 Kool2play will offset losses from the drop in Kool2play's long position.The idea behind Abak SA and Kool2play 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.| Kool2play vs. Clean Carbon Energy | Kool2play vs. ADX | Kool2play vs. Agroliga Group PLC | Kool2play vs. Vee 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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