Correlation Between Antibiotice and Teraplast Bist
Can any of the company-specific risk be diversified away by investing in both Antibiotice and Teraplast Bist 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 Antibiotice and Teraplast Bist into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Antibiotice Ia and Teraplast Bist, you can compare the effects of market volatilities on Antibiotice and Teraplast Bist 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 Antibiotice with a short position of Teraplast Bist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antibiotice and Teraplast Bist.
Diversification Opportunities for Antibiotice and Teraplast Bist
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Antibiotice and Teraplast is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Antibiotice Ia and Teraplast Bist in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teraplast Bist and Antibiotice 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 Antibiotice Ia are associated (or correlated) with Teraplast Bist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teraplast Bist has no effect on the direction of Antibiotice i.e., Antibiotice and Teraplast Bist go up and down completely randomly.
Pair Corralation between Antibiotice and Teraplast Bist
Assuming the 90 days trading horizon Antibiotice Ia is expected to under-perform the Teraplast Bist. In addition to that, Antibiotice is 2.17 times more volatile than Teraplast Bist. It trades about -0.14 of its total potential returns per unit of risk. Teraplast Bist is currently generating about -0.16 per unit of volatility. If you would invest 48.00 in Teraplast Bist on August 28, 2024 and sell it today you would lose (3.00) from holding Teraplast Bist or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Antibiotice Ia vs. Teraplast Bist
Performance |
| Timeline |
| Antibiotice Ia |
| Teraplast Bist |
Antibiotice and Teraplast Bist Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antibiotice and Teraplast Bist
The main advantage of trading using opposite Antibiotice and Teraplast Bist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antibiotice position performs unexpectedly, Teraplast Bist 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 Teraplast Bist will offset losses from the drop in Teraplast Bist's long position.The idea behind Antibiotice Ia and Teraplast Bist 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.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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