Correlation Between Salomon A and Carmit
Can any of the company-specific risk be diversified away by investing in both Salomon A and Carmit 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 Salomon A and Carmit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salomon A Angel and Carmit, you can compare the effects of market volatilities on Salomon A and Carmit 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 Salomon A with a short position of Carmit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salomon A and Carmit.
Diversification Opportunities for Salomon A and Carmit
Excellent diversification
The 3 months correlation between Salomon and Carmit is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Salomon A Angel and Carmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmit and Salomon A 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 Salomon A Angel are associated (or correlated) with Carmit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmit has no effect on the direction of Salomon A i.e., Salomon A and Carmit go up and down completely randomly.
Pair Corralation between Salomon A and Carmit
Assuming the 90 days trading horizon Salomon A Angel is expected to generate 2.56 times more return on investment than Carmit. However, Salomon A is 2.56 times more volatile than Carmit. It trades about 0.37 of its potential returns per unit of risk. Carmit is currently generating about 0.07 per unit of risk. If you would invest 298,800 in Salomon A Angel on September 2, 2024 and sell it today you would earn a total of 65,400 from holding Salomon A Angel or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salomon A Angel vs. Carmit
Performance |
| Timeline |
| Salomon A Angel |
| Carmit |
Salomon A and Carmit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salomon A and Carmit
The main advantage of trading using opposite Salomon A and Carmit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salomon A position performs unexpectedly, Carmit 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 Carmit will offset losses from the drop in Carmit's long position.| Salomon A vs. Zanlakol | Salomon A vs. Gan Shmuel | Salomon A vs. Carmit | Salomon A vs. Sano Brunos Enterprises |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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