Correlation Between Amica SA and Echo Investment
Can any of the company-specific risk be diversified away by investing in both Amica SA and Echo Investment 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 Amica SA and Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amica SA and Echo Investment SA, you can compare the effects of market volatilities on Amica SA and Echo Investment 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 Amica SA with a short position of Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amica SA and Echo Investment.
Diversification Opportunities for Amica SA and Echo Investment
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amica and Echo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amica SA and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment SA and Amica SA 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 Amica SA are associated (or correlated) with Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of Amica SA i.e., Amica SA and Echo Investment go up and down completely randomly.
Pair Corralation between Amica SA and Echo Investment
Assuming the 90 days trading horizon Amica SA is expected to under-perform the Echo Investment. But the stock apears to be less risky and, when comparing its historical volatility, Amica SA is 1.28 times less risky than Echo Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Echo Investment SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 465.00 in Echo Investment SA on September 1, 2024 and sell it today you would lose (29.00) from holding Echo Investment SA or give up 6.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Amica SA vs. Echo Investment SA
Performance |
| Timeline |
| Amica SA |
| Echo Investment SA |
Amica SA and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amica SA and Echo Investment
The main advantage of trading using opposite Amica SA and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amica SA position performs unexpectedly, Echo Investment 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 Echo Investment will offset losses from the drop in Echo Investment's long position.| Amica SA vs. Echo Investment SA | Amica SA vs. Esotiq Henderson SA | Amica SA vs. Asseco Business Solutions | Amica SA vs. Detalion Games SA |
| Echo Investment vs. MW Trade SA | Echo Investment vs. Quantum Software SA | Echo Investment vs. mBank SA | Echo Investment vs. GreenX Metals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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