Correlation Between Big Camera and Ananda Development
Can any of the company-specific risk be diversified away by investing in both Big Camera and Ananda Development 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 Big Camera and Ananda Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Camera and Ananda Development Public, you can compare the effects of market volatilities on Big Camera and Ananda Development 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 Big Camera with a short position of Ananda Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Camera and Ananda Development.
Diversification Opportunities for Big Camera and Ananda Development
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Big and Ananda is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Big Camera and Ananda Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ananda Development Public and Big Camera 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 Big Camera are associated (or correlated) with Ananda Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ananda Development Public has no effect on the direction of Big Camera i.e., Big Camera and Ananda Development go up and down completely randomly.
Pair Corralation between Big Camera and Ananda Development
Assuming the 90 days trading horizon Big Camera is expected to under-perform the Ananda Development. In addition to that, Big Camera is 2.3 times more volatile than Ananda Development Public. It trades about -0.19 of its total potential returns per unit of risk. Ananda Development Public is currently generating about -0.28 per unit of volatility. If you would invest 72.00 in Ananda Development Public on August 29, 2024 and sell it today you would lose (6.00) from holding Ananda Development Public or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Camera vs. Ananda Development Public
Performance |
| Timeline |
| Big Camera |
| Ananda Development Public |
Big Camera and Ananda Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Camera and Ananda Development
The main advantage of trading using opposite Big Camera and Ananda Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Camera position performs unexpectedly, Ananda Development 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 Ananda Development will offset losses from the drop in Ananda Development's long position.| Big Camera vs. Ananda Development Public | Big Camera vs. Beauty Community Public | Big Camera vs. Asia Aviation Public | Big Camera vs. Gunkul Engineering Public |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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