Correlation Between Aeorema Communications and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Flow Traders 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 Flow Traders 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 Flow Traders NV, you can compare the effects of market volatilities on Aeorema Communications and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Flow Traders.
Diversification Opportunities for Aeorema Communications and Flow Traders
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aeorema and Flow is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Flow Traders go up and down completely randomly.
Pair Corralation between Aeorema Communications and Flow Traders
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to generate 1.25 times more return on investment than Flow Traders. However, Aeorema Communications is 1.25 times more volatile than Flow Traders NV. It trades about 0.14 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.0 per unit of risk. If you would invest 5,250 in Aeorema Communications Plc on August 24, 2024 and sell it today you would earn a total of 300.00 from holding Aeorema Communications Plc or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Flow Traders NV
Performance |
| Timeline |
| Aeorema Communications |
| Flow Traders NV |
Aeorema Communications and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Flow Traders
The main advantage of trading using opposite Aeorema Communications and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' 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 |
| Flow Traders vs. Quadrise Plc | Flow Traders vs. Intuitive Investments Group | Flow Traders vs. European Metals Holdings | Flow Traders vs. Athelney Trust 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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