Correlation Between Auto Trader and Ondine Biomedical
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Ondine Biomedical 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 Auto Trader and Ondine Biomedical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Ondine Biomedical, you can compare the effects of market volatilities on Auto Trader and Ondine Biomedical 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 Auto Trader with a short position of Ondine Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Ondine Biomedical.
Diversification Opportunities for Auto Trader and Ondine Biomedical
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and Ondine is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Ondine Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ondine Biomedical and Auto Trader 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 Auto Trader Group are associated (or correlated) with Ondine Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ondine Biomedical has no effect on the direction of Auto Trader i.e., Auto Trader and Ondine Biomedical go up and down completely randomly.
Pair Corralation between Auto Trader and Ondine Biomedical
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.28 times more return on investment than Ondine Biomedical. However, Auto Trader Group is 3.57 times less risky than Ondine Biomedical. It trades about 0.06 of its potential returns per unit of risk. Ondine Biomedical is currently generating about -0.02 per unit of risk. If you would invest 61,243 in Auto Trader Group on August 31, 2024 and sell it today you would earn a total of 23,317 from holding Auto Trader Group or generate 38.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Ondine Biomedical
Performance |
| Timeline |
| Auto Trader Group |
| Ondine Biomedical |
Auto Trader and Ondine Biomedical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Ondine Biomedical
The main advantage of trading using opposite Auto Trader and Ondine Biomedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Ondine Biomedical 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 Ondine Biomedical will offset losses from the drop in Ondine Biomedical's long position.| Auto Trader vs. Infrastrutture Wireless Italiane | Auto Trader vs. European Metals Holdings | Auto Trader vs. Gamma Communications PLC | Auto Trader vs. Empire Metals Limited |
| Ondine Biomedical vs. Bytes Technology | Ondine Biomedical vs. AMG Advanced Metallurgical | Ondine Biomedical vs. Metals Exploration Plc | Ondine Biomedical vs. Silvercorp Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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