Correlation Between Theradiag and Artois Nom
Can any of the company-specific risk be diversified away by investing in both Theradiag and Artois Nom 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 Theradiag and Artois Nom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Theradiag SA and Artois Nom, you can compare the effects of market volatilities on Theradiag and Artois Nom 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 Theradiag with a short position of Artois Nom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Theradiag and Artois Nom.
Diversification Opportunities for Theradiag and Artois Nom
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Theradiag and Artois is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Theradiag SA and Artois Nom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artois Nom and Theradiag 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 Theradiag SA are associated (or correlated) with Artois Nom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artois Nom has no effect on the direction of Theradiag i.e., Theradiag and Artois Nom go up and down completely randomly.
Pair Corralation between Theradiag and Artois Nom
Assuming the 90 days trading horizon Theradiag SA is expected to under-perform the Artois Nom. In addition to that, Theradiag is 6.82 times more volatile than Artois Nom. It trades about -0.09 of its total potential returns per unit of risk. Artois Nom is currently generating about -0.14 per unit of volatility. If you would invest 975,000 in Artois Nom on August 30, 2024 and sell it today you would lose (20,000) from holding Artois Nom or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Theradiag SA vs. Artois Nom
Performance |
| Timeline |
| Theradiag SA |
| Artois Nom |
Theradiag and Artois Nom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Theradiag and Artois Nom
The main advantage of trading using opposite Theradiag and Artois Nom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Theradiag position performs unexpectedly, Artois Nom 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 Artois Nom will offset losses from the drop in Artois Nom's long position.The idea behind Theradiag SA and Artois Nom 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.| Artois Nom vs. Aubay Socit Anonyme | Artois Nom vs. Infotel SA | Artois Nom vs. IT Link | Artois Nom 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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