Correlation Between Salomon A and Neto Malinda
Can any of the company-specific risk be diversified away by investing in both Salomon A and Neto Malinda 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 Neto Malinda 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 Neto Malinda, you can compare the effects of market volatilities on Salomon A and Neto Malinda 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 Neto Malinda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salomon A and Neto Malinda.
Diversification Opportunities for Salomon A and Neto Malinda
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Salomon and Neto is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Salomon A Angel and Neto Malinda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neto Malinda 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 Neto Malinda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neto Malinda has no effect on the direction of Salomon A i.e., Salomon A and Neto Malinda go up and down completely randomly.
Pair Corralation between Salomon A and Neto Malinda
Assuming the 90 days trading horizon Salomon A is expected to generate 21.62 times less return on investment than Neto Malinda. In addition to that, Salomon A is 2.21 times more volatile than Neto Malinda. It trades about 0.01 of its total potential returns per unit of risk. Neto Malinda is currently generating about 0.31 per unit of volatility. If you would invest 638,000 in Neto Malinda on September 2, 2024 and sell it today you would earn a total of 164,200 from holding Neto Malinda or generate 25.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salomon A Angel vs. Neto Malinda
Performance |
| Timeline |
| Salomon A Angel |
| Neto Malinda |
Salomon A and Neto Malinda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salomon A and Neto Malinda
The main advantage of trading using opposite Salomon A and Neto Malinda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salomon A position performs unexpectedly, Neto Malinda 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 Neto Malinda will offset losses from the drop in Neto Malinda'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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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