Correlation Between Bourse Direct and IT Link
Can any of the company-specific risk be diversified away by investing in both Bourse Direct and IT Link 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 Bourse Direct and IT Link into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bourse Direct SA and IT Link, you can compare the effects of market volatilities on Bourse Direct and IT Link 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 Bourse Direct with a short position of IT Link. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bourse Direct and IT Link.
Diversification Opportunities for Bourse Direct and IT Link
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bourse and ALITL is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bourse Direct SA and IT Link in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IT Link and Bourse Direct 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 Bourse Direct SA are associated (or correlated) with IT Link. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IT Link has no effect on the direction of Bourse Direct i.e., Bourse Direct and IT Link go up and down completely randomly.
Pair Corralation between Bourse Direct and IT Link
Assuming the 90 days trading horizon Bourse Direct SA is expected to under-perform the IT Link. In addition to that, Bourse Direct is 1.27 times more volatile than IT Link. It trades about -0.13 of its total potential returns per unit of risk. IT Link is currently generating about -0.07 per unit of volatility. If you would invest 2,700 in IT Link on August 27, 2024 and sell it today you would lose (70.00) from holding IT Link or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bourse Direct SA vs. IT Link
Performance |
| Timeline |
| Bourse Direct SA |
| IT Link |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bourse Direct and IT Link Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bourse Direct and IT Link
The main advantage of trading using opposite Bourse Direct and IT Link positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bourse Direct position performs unexpectedly, IT Link 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 IT Link will offset losses from the drop in IT Link's long position.| Bourse Direct vs. BigBen Interactive | Bourse Direct vs. ABC arbitrage SA | Bourse Direct vs. Chargeurs SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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