Correlation Between Aeorema Communications and Amundi Index
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Amundi Index 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 Amundi Index 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 Amundi Index Solutions, you can compare the effects of market volatilities on Aeorema Communications and Amundi Index 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 Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Amundi Index.
Diversification Opportunities for Aeorema Communications and Amundi Index
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aeorema and Amundi is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions 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 Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Amundi Index go up and down completely randomly.
Pair Corralation between Aeorema Communications and Amundi Index
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to generate 1.24 times more return on investment than Amundi Index. However, Aeorema Communications is 1.24 times more volatile than Amundi Index Solutions. It trades about 0.01 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about -0.15 per unit of risk. If you would invest 5,450 in Aeorema Communications Plc on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Aeorema Communications Plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Amundi Index Solutions
Performance |
| Timeline |
| Aeorema Communications |
| Amundi Index Solutions |
Aeorema Communications and Amundi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Amundi Index
The main advantage of trading using opposite Aeorema Communications and Amundi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Amundi Index 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 Amundi Index will offset losses from the drop in Amundi Index's long position.The idea behind Aeorema Communications Plc and Amundi Index Solutions 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.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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