Correlation Between Reworld Media and Akwel SA
Can any of the company-specific risk be diversified away by investing in both Reworld Media and Akwel 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 Reworld Media and Akwel SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reworld Media and Akwel SA, you can compare the effects of market volatilities on Reworld Media and Akwel 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 Reworld Media with a short position of Akwel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reworld Media and Akwel SA.
Diversification Opportunities for Reworld Media and Akwel SA
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Reworld and Akwel is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Reworld Media and Akwel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akwel SA and Reworld Media 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 Reworld Media are associated (or correlated) with Akwel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akwel SA has no effect on the direction of Reworld Media i.e., Reworld Media and Akwel SA go up and down completely randomly.
Pair Corralation between Reworld Media and Akwel SA
Assuming the 90 days trading horizon Reworld Media is expected to under-perform the Akwel SA. In addition to that, Reworld Media is 1.79 times more volatile than Akwel SA. It trades about -0.14 of its total potential returns per unit of risk. Akwel SA is currently generating about -0.19 per unit of volatility. If you would invest 1,284 in Akwel SA on August 31, 2024 and sell it today you would lose (484.00) from holding Akwel SA or give up 37.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reworld Media vs. Akwel SA
Performance |
| Timeline |
| Reworld Media |
| Akwel SA |
Reworld Media and Akwel SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reworld Media and Akwel SA
The main advantage of trading using opposite Reworld Media and Akwel SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reworld Media position performs unexpectedly, Akwel 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 Akwel SA will offset losses from the drop in Akwel SA's long position.The idea behind Reworld Media and Akwel 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.| Akwel SA vs. Vente Unique | Akwel SA vs. Groupe Sfpi | Akwel SA vs. Cegedim SA | Akwel SA vs. SA Catana Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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