Correlation Between Roctool and Bourse Direct
Can any of the company-specific risk be diversified away by investing in both Roctool and Bourse Direct 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 Roctool and Bourse Direct into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roctool and Bourse Direct SA, you can compare the effects of market volatilities on Roctool and Bourse Direct 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 Roctool with a short position of Bourse Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roctool and Bourse Direct.
Diversification Opportunities for Roctool and Bourse Direct
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Roctool and Bourse is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Roctool and Bourse Direct SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bourse Direct SA and Roctool 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 Roctool are associated (or correlated) with Bourse Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bourse Direct SA has no effect on the direction of Roctool i.e., Roctool and Bourse Direct go up and down completely randomly.
Pair Corralation between Roctool and Bourse Direct
Assuming the 90 days trading horizon Roctool is expected to under-perform the Bourse Direct. In addition to that, Roctool is 3.8 times more volatile than Bourse Direct SA. It trades about -0.05 of its total potential returns per unit of risk. Bourse Direct SA is currently generating about -0.1 per unit of volatility. If you would invest 570.00 in Bourse Direct SA on September 2, 2024 and sell it today you would lose (132.00) from holding Bourse Direct SA or give up 23.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roctool vs. Bourse Direct SA
Performance |
| Timeline |
| Roctool |
| Bourse Direct SA |
Roctool and Bourse Direct Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roctool and Bourse Direct
The main advantage of trading using opposite Roctool and Bourse Direct positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roctool position performs unexpectedly, Bourse Direct 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 Bourse Direct will offset losses from the drop in Bourse Direct's long position.The idea behind Roctool and Bourse Direct 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.| Bourse Direct vs. BigBen Interactive | Bourse Direct vs. ABC arbitrage SA | Bourse Direct vs. CBO Territoria SA | Bourse Direct vs. Aurea 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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