Correlation Between Adocia and Compagnie
Can any of the company-specific risk be diversified away by investing in both Adocia and Compagnie 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 Adocia and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adocia and Compagnie de Chemins, you can compare the effects of market volatilities on Adocia and Compagnie 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 Adocia with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adocia and Compagnie.
Diversification Opportunities for Adocia and Compagnie
Poor diversification
The 3 months correlation between Adocia and Compagnie is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Compagnie de Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Chemins and Adocia 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 Adocia are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Chemins has no effect on the direction of Adocia i.e., Adocia and Compagnie go up and down completely randomly.
Pair Corralation between Adocia and Compagnie
Assuming the 90 days trading horizon Adocia is expected to under-perform the Compagnie. In addition to that, Adocia is 2.4 times more volatile than Compagnie de Chemins. It trades about -0.22 of its total potential returns per unit of risk. Compagnie de Chemins is currently generating about 0.01 per unit of volatility. If you would invest 90,000 in Compagnie de Chemins on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Compagnie de Chemins or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adocia vs. Compagnie de Chemins
Performance |
| Timeline |
| Adocia |
| Compagnie de Chemins |
Adocia and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adocia and Compagnie
The main advantage of trading using opposite Adocia and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adocia position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.The idea behind Adocia and Compagnie de Chemins 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.| Compagnie vs. Fill Up Media | Compagnie vs. X Fab Silicon | Compagnie vs. Eutelsat Communications SA | Compagnie vs. Impulse Fitness Solutions |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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