Correlation Between Glob Bioenergi and Methanor
Can any of the company-specific risk be diversified away by investing in both Glob Bioenergi and Methanor 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 Glob Bioenergi and Methanor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glob Bioenergi and Methanor, you can compare the effects of market volatilities on Glob Bioenergi and Methanor 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 Glob Bioenergi with a short position of Methanor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glob Bioenergi and Methanor.
Diversification Opportunities for Glob Bioenergi and Methanor
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Glob and Methanor is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Glob Bioenergi and Methanor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanor and Glob Bioenergi 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 Glob Bioenergi are associated (or correlated) with Methanor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanor has no effect on the direction of Glob Bioenergi i.e., Glob Bioenergi and Methanor go up and down completely randomly.
Pair Corralation between Glob Bioenergi and Methanor
Assuming the 90 days trading horizon Glob Bioenergi is expected to generate 2.06 times more return on investment than Methanor. However, Glob Bioenergi is 2.06 times more volatile than Methanor. It trades about -0.02 of its potential returns per unit of risk. Methanor is currently generating about -0.04 per unit of risk. If you would invest 290.00 in Glob Bioenergi on August 31, 2024 and sell it today you would lose (207.00) from holding Glob Bioenergi or give up 71.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glob Bioenergi vs. Methanor
Performance |
| Timeline |
| Glob Bioenergi |
| Methanor |
Glob Bioenergi and Methanor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glob Bioenergi and Methanor
The main advantage of trading using opposite Glob Bioenergi and Methanor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glob Bioenergi position performs unexpectedly, Methanor 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 Methanor will offset losses from the drop in Methanor's long position.The idea behind Glob Bioenergi and Methanor 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.| Methanor vs. Voltalia SA | Methanor vs. Ecoslops SA | Methanor vs. Agripower France Sa | Methanor vs. Glob Bioenergi |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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