Correlation Between ASSOC BR and Laureate Education
Can any of the company-specific risk be diversified away by investing in both ASSOC BR and Laureate Education 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 Laureate Education 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 Laureate Education, you can compare the effects of market volatilities on ASSOC BR and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and Laureate Education.
Diversification Opportunities for ASSOC BR and Laureate Education
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASSOC and Laureate is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of ASSOC BR i.e., ASSOC BR and Laureate Education go up and down completely randomly.
Pair Corralation between ASSOC BR and Laureate Education
Assuming the 90 days trading horizon ASSOC BR is expected to generate 1.68 times less return on investment than Laureate Education. But when comparing it to its historical volatility, ASSOC BR FOODS is 1.43 times less risky than Laureate Education. It trades about 0.07 of its potential returns per unit of risk. Laureate Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 855.00 in Laureate Education on September 14, 2024 and sell it today you would earn a total of 905.00 from holding Laureate Education or generate 105.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSOC BR FOODS vs. Laureate Education
Performance |
| Timeline |
| ASSOC BR FOODS |
| Laureate Education |
ASSOC BR and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSOC BR and Laureate Education
The main advantage of trading using opposite ASSOC BR and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSOC BR position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| ASSOC BR vs. Hormel Foods | ASSOC BR vs. Superior Plus Corp | ASSOC BR vs. SIVERS SEMICONDUCTORS AB | ASSOC BR vs. NorAm Drilling AS |
| Laureate Education vs. NISSIN FOODS HLDGS | Laureate Education vs. TOREX SEMICONDUCTOR LTD | Laureate Education vs. NXP Semiconductors NV | Laureate Education vs. THAI BEVERAGE |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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