Correlation Between Accor S and ID Logistics
Can any of the company-specific risk be diversified away by investing in both Accor S and ID Logistics 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 Accor S and ID Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accor S A and ID Logistics Group, you can compare the effects of market volatilities on Accor S and ID Logistics 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 Accor S with a short position of ID Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accor S and ID Logistics.
Diversification Opportunities for Accor S and ID Logistics
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Accor and IDL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Accor S A and ID Logistics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ID Logistics Group and Accor S 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 Accor S A are associated (or correlated) with ID Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ID Logistics Group has no effect on the direction of Accor S i.e., Accor S and ID Logistics go up and down completely randomly.
Pair Corralation between Accor S and ID Logistics
Assuming the 90 days horizon Accor S is expected to generate 1.37 times less return on investment than ID Logistics. But when comparing it to its historical volatility, Accor S A is 1.38 times less risky than ID Logistics. It trades about 0.07 of its potential returns per unit of risk. ID Logistics Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 25,550 in ID Logistics Group on August 31, 2024 and sell it today you would earn a total of 13,650 from holding ID Logistics Group or generate 53.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Accor S A vs. ID Logistics Group
Performance |
| Timeline |
| Accor S A |
| ID Logistics Group |
Accor S and ID Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accor S and ID Logistics
The main advantage of trading using opposite Accor S and ID Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accor S position performs unexpectedly, ID Logistics 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 ID Logistics will offset losses from the drop in ID Logistics' long position.The idea behind Accor S A and ID Logistics Group 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.| ID Logistics vs. Interparfums SA | ID Logistics vs. Stef SA | ID Logistics vs. Virbac SA | ID Logistics vs. Esker 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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