Correlation Between Adocia and SES S
Can any of the company-specific risk be diversified away by investing in both Adocia and SES S 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 SES S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adocia and SES S A, you can compare the effects of market volatilities on Adocia and SES S 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 SES S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adocia and SES S.
Diversification Opportunities for Adocia and SES S
Pay attention - limited upside
The 3 months correlation between Adocia and SES is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and SES S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES S A 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 SES S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES S A has no effect on the direction of Adocia i.e., Adocia and SES S go up and down completely randomly.
Pair Corralation between Adocia and SES S
Assuming the 90 days trading horizon Adocia is expected to generate 3.25 times more return on investment than SES S. However, Adocia is 3.25 times more volatile than SES S A. It trades about 0.0 of its potential returns per unit of risk. SES S A is currently generating about -0.17 per unit of risk. If you would invest 884.00 in Adocia on September 1, 2024 and sell it today you would lose (134.00) from holding Adocia or give up 15.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
Adocia vs. SES S A
Performance |
| Timeline |
| Adocia |
| SES S A |
Adocia and SES S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adocia and SES S
The main advantage of trading using opposite Adocia and SES S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adocia position performs unexpectedly, SES S 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 SES S will offset losses from the drop in SES S's long position.The idea behind Adocia and SES S A 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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