Correlation Between ANT and SSE PLC
Can any of the company-specific risk be diversified away by investing in both ANT and SSE PLC 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 ANT and SSE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANT and SSE PLC ADR, you can compare the effects of market volatilities on ANT and SSE PLC 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 ANT with a short position of SSE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and SSE PLC.
Diversification Opportunities for ANT and SSE PLC
Modest diversification
The 3 months correlation between ANT and SSE is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ANT and SSE PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSE PLC ADR and ANT 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 ANT are associated (or correlated) with SSE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSE PLC ADR has no effect on the direction of ANT i.e., ANT and SSE PLC go up and down completely randomly.
Pair Corralation between ANT and SSE PLC
Assuming the 90 days trading horizon ANT is expected to generate 63.93 times more return on investment than SSE PLC. However, ANT is 63.93 times more volatile than SSE PLC ADR. It trades about 0.16 of its potential returns per unit of risk. SSE PLC ADR is currently generating about -0.09 per unit of risk. If you would invest 610.00 in ANT on November 2, 2024 and sell it today you would lose (463.00) from holding ANT or give up 75.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.26% |
| Values | Daily Returns |
ANT vs. SSE PLC ADR
Performance |
| Timeline |
| ANT |
| SSE PLC ADR |
ANT and SSE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANT and SSE PLC
The main advantage of trading using opposite ANT and SSE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANT position performs unexpectedly, SSE PLC 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 SSE PLC will offset losses from the drop in SSE PLC's long position.The idea behind ANT and SSE PLC ADR 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.| SSE PLC vs. WIMFARM SA EO | SSE PLC vs. Daito Trust Construction | SSE PLC vs. INTER CARS SA | SSE PLC vs. Motorcar Parts of |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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