Correlation Between Bluelinea and ICeram SA
Can any of the company-specific risk be diversified away by investing in both Bluelinea and ICeram SA 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 Bluelinea and ICeram SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluelinea SA and ICeram SA, you can compare the effects of market volatilities on Bluelinea and ICeram SA 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 Bluelinea with a short position of ICeram SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluelinea and ICeram SA.
Diversification Opportunities for Bluelinea and ICeram SA
Very good diversification
The 3 months correlation between Bluelinea and ICeram is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bluelinea SA and ICeram SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICeram SA and Bluelinea 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 Bluelinea SA are associated (or correlated) with ICeram SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICeram SA has no effect on the direction of Bluelinea i.e., Bluelinea and ICeram SA go up and down completely randomly.
Pair Corralation between Bluelinea and ICeram SA
Assuming the 90 days trading horizon Bluelinea SA is expected to generate 0.27 times more return on investment than ICeram SA. However, Bluelinea SA is 3.71 times less risky than ICeram SA. It trades about -0.02 of its potential returns per unit of risk. ICeram SA is currently generating about -0.05 per unit of risk. If you would invest 130.00 in Bluelinea SA on September 3, 2024 and sell it today you would lose (40.00) from holding Bluelinea SA or give up 30.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Bluelinea SA vs. ICeram SA
Performance |
| Timeline |
| Bluelinea SA |
| ICeram SA |
Bluelinea and ICeram SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluelinea and ICeram SA
The main advantage of trading using opposite Bluelinea and ICeram SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluelinea position performs unexpectedly, ICeram SA 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 ICeram SA will offset losses from the drop in ICeram SA's long position.The idea behind Bluelinea SA and ICeram SA 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.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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