Correlation Between Archos and GECI International
Can any of the company-specific risk be diversified away by investing in both Archos and GECI International 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 Archos and GECI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archos and GECI International SA, you can compare the effects of market volatilities on Archos and GECI International 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 Archos with a short position of GECI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archos and GECI International.
Diversification Opportunities for Archos and GECI International
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Archos and GECI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Archos and GECI International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GECI International and Archos 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 Archos are associated (or correlated) with GECI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GECI International has no effect on the direction of Archos i.e., Archos and GECI International go up and down completely randomly.
Pair Corralation between Archos and GECI International
Assuming the 90 days trading horizon Archos is expected to under-perform the GECI International. But the stock apears to be less risky and, when comparing its historical volatility, Archos is 1.44 times less risky than GECI International. The stock trades about -0.02 of its potential returns per unit of risk. The GECI International SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,800 in GECI International SA on September 4, 2024 and sell it today you would lose (1,536) from holding GECI International SA or give up 85.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Archos vs. GECI International SA
Performance |
| Timeline |
| Archos |
| GECI International |
Archos and GECI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archos and GECI International
The main advantage of trading using opposite Archos and GECI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archos position performs unexpectedly, GECI International 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 GECI International will offset losses from the drop in GECI International's long position.The idea behind Archos and GECI International 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.| GECI International vs. Europlasma SA | GECI International vs. Archos | GECI International vs. DBT SA | GECI International vs. Manitou BF SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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