Correlation Between Auction Technology and Bloomsbury Publishing
Can any of the company-specific risk be diversified away by investing in both Auction Technology and Bloomsbury Publishing 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 Auction Technology and Bloomsbury Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auction Technology Group and Bloomsbury Publishing Plc, you can compare the effects of market volatilities on Auction Technology and Bloomsbury Publishing 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 Auction Technology with a short position of Bloomsbury Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Bloomsbury Publishing.
Diversification Opportunities for Auction Technology and Bloomsbury Publishing
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Auction and Bloomsbury is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Bloomsbury Publishing Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomsbury Publishing Plc and Auction Technology 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 Auction Technology Group are associated (or correlated) with Bloomsbury Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomsbury Publishing Plc has no effect on the direction of Auction Technology i.e., Auction Technology and Bloomsbury Publishing go up and down completely randomly.
Pair Corralation between Auction Technology and Bloomsbury Publishing
Assuming the 90 days trading horizon Auction Technology is expected to generate 1.67 times less return on investment than Bloomsbury Publishing. In addition to that, Auction Technology is 1.33 times more volatile than Bloomsbury Publishing Plc. It trades about 0.03 of its total potential returns per unit of risk. Bloomsbury Publishing Plc is currently generating about 0.08 per unit of volatility. If you would invest 46,491 in Bloomsbury Publishing Plc on November 3, 2024 and sell it today you would earn a total of 20,109 from holding Bloomsbury Publishing Plc or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Auction Technology Group vs. Bloomsbury Publishing Plc
Performance |
| Timeline |
| Auction Technology |
| Bloomsbury Publishing Plc |
Auction Technology and Bloomsbury Publishing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and Bloomsbury Publishing
The main advantage of trading using opposite Auction Technology and Bloomsbury Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology position performs unexpectedly, Bloomsbury Publishing 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 Bloomsbury Publishing will offset losses from the drop in Bloomsbury Publishing's long position.| Auction Technology vs. Public Storage | Auction Technology vs. Spotify Technology SA | Auction Technology vs. Axway Software SA | Auction Technology vs. Alliance Data Systems |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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