Correlation Between Aeorema Communications and Sligro Food
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Sligro Food 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 Aeorema Communications and Sligro Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Sligro Food Group, you can compare the effects of market volatilities on Aeorema Communications and Sligro Food 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 Aeorema Communications with a short position of Sligro Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Sligro Food.
Diversification Opportunities for Aeorema Communications and Sligro Food
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aeorema and Sligro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Sligro Food go up and down completely randomly.
Pair Corralation between Aeorema Communications and Sligro Food
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Sligro Food. In addition to that, Aeorema Communications is 1.88 times more volatile than Sligro Food Group. It trades about -0.06 of its total potential returns per unit of risk. Sligro Food Group is currently generating about -0.09 per unit of volatility. If you would invest 1,515 in Sligro Food Group on September 2, 2024 and sell it today you would lose (441.00) from holding Sligro Food Group or give up 29.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Sligro Food Group
Performance |
| Timeline |
| Aeorema Communications |
| Sligro Food Group |
Aeorema Communications and Sligro Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Sligro Food
The main advantage of trading using opposite Aeorema Communications and Sligro Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Sligro Food 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 Sligro Food will offset losses from the drop in Sligro Food's long position.| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
| Sligro Food vs. Uniper SE | Sligro Food vs. Mulberry Group PLC | Sligro Food vs. London Security Plc | Sligro Food vs. Triad Group PLC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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