Correlation Between Arko Corp and Ceconomy
Can any of the company-specific risk be diversified away by investing in both Arko Corp and Ceconomy 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 Arko Corp and Ceconomy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arko Corp and Ceconomy AG ADR, you can compare the effects of market volatilities on Arko Corp and Ceconomy 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 Arko Corp with a short position of Ceconomy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arko Corp and Ceconomy.
Diversification Opportunities for Arko Corp and Ceconomy
Poor diversification
The 3 months correlation between Arko and Ceconomy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Arko Corp and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG ADR and Arko Corp 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 Arko Corp are associated (or correlated) with Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of Arko Corp i.e., Arko Corp and Ceconomy go up and down completely randomly.
Pair Corralation between Arko Corp and Ceconomy
Given the investment horizon of 90 days Arko Corp is expected to generate 2.85 times less return on investment than Ceconomy. But when comparing it to its historical volatility, Arko Corp is 2.13 times less risky than Ceconomy. It trades about 0.01 of its potential returns per unit of risk. Ceconomy AG ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Ceconomy AG ADR on August 27, 2024 and sell it today you would lose (1.00) from holding Ceconomy AG ADR or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arko Corp vs. Ceconomy AG ADR
Performance |
| Timeline |
| Arko Corp |
| Ceconomy AG ADR |
Arko Corp and Ceconomy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arko Corp and Ceconomy
The main advantage of trading using opposite Arko Corp and Ceconomy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arko Corp position performs unexpectedly, Ceconomy 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 Ceconomy will offset losses from the drop in Ceconomy's long position.| Arko Corp vs. Murphy USA | Arko Corp vs. National Vision Holdings | Arko Corp vs. ODP Corp | Arko Corp vs. Genuine Parts Co |
| Ceconomy vs. Burlington Stores | Ceconomy vs. Childrens Place | Ceconomy vs. Buckle Inc | Ceconomy vs. Shoe Carnival |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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