Correlation Between ASSOC BR and CIA ENGER
Can any of the company-specific risk be diversified away by investing in both ASSOC BR and CIA ENGER 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 ASSOC BR and CIA ENGER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSOC BR FOODS and CIA ENGER ADR, you can compare the effects of market volatilities on ASSOC BR and CIA ENGER 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 ASSOC BR with a short position of CIA ENGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and CIA ENGER.
Diversification Opportunities for ASSOC BR and CIA ENGER
Excellent diversification
The 3 months correlation between ASSOC and CIA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS and CIA ENGER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIA ENGER ADR and ASSOC BR 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 ASSOC BR FOODS are associated (or correlated) with CIA ENGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIA ENGER ADR has no effect on the direction of ASSOC BR i.e., ASSOC BR and CIA ENGER go up and down completely randomly.
Pair Corralation between ASSOC BR and CIA ENGER
Assuming the 90 days trading horizon ASSOC BR FOODS is expected to under-perform the CIA ENGER. In addition to that, ASSOC BR is 4.03 times more volatile than CIA ENGER ADR. It trades about -0.23 of its total potential returns per unit of risk. CIA ENGER ADR is currently generating about 0.25 per unit of volatility. If you would invest 211.00 in CIA ENGER ADR on October 21, 2024 and sell it today you would earn a total of 3.00 from holding CIA ENGER ADR or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
ASSOC BR FOODS vs. CIA ENGER ADR
Performance |
| Timeline |
| ASSOC BR FOODS |
| CIA ENGER ADR |
ASSOC BR and CIA ENGER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSOC BR and CIA ENGER
The main advantage of trading using opposite ASSOC BR and CIA ENGER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSOC BR position performs unexpectedly, CIA ENGER 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 CIA ENGER will offset losses from the drop in CIA ENGER's long position.| ASSOC BR vs. QBE Insurance Group | ASSOC BR vs. Safety Insurance Group | ASSOC BR vs. Universal Insurance Holdings | ASSOC BR vs. Alaska Air Group |
| CIA ENGER vs. IBERDROLA ADR1 EO | CIA ENGER vs. SSE PLC ADR | CIA ENGER vs. C PARAN EN | CIA ENGER vs. Companhia Energtica de |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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