Correlation Between Bourse Direct and Roctool
Can any of the company-specific risk be diversified away by investing in both Bourse Direct and Roctool 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 Roctool 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 Roctool, you can compare the effects of market volatilities on Bourse Direct and Roctool 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 Roctool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bourse Direct and Roctool.
Diversification Opportunities for Bourse Direct and Roctool
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bourse and Roctool is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bourse Direct SA and Roctool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roctool 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 Roctool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roctool has no effect on the direction of Bourse Direct i.e., Bourse Direct and Roctool go up and down completely randomly.
Pair Corralation between Bourse Direct and Roctool
Assuming the 90 days trading horizon Bourse Direct SA is expected to under-perform the Roctool. But the stock apears to be less risky and, when comparing its historical volatility, Bourse Direct SA is 5.56 times less risky than Roctool. The stock trades about -0.04 of its potential returns per unit of risk. The Roctool is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Roctool on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Roctool or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bourse Direct SA vs. Roctool
Performance |
| Timeline |
| Bourse Direct SA |
| Roctool |
Bourse Direct and Roctool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bourse Direct and Roctool
The main advantage of trading using opposite Bourse Direct and Roctool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bourse Direct position performs unexpectedly, Roctool 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 Roctool will offset losses from the drop in Roctool's long position.| Bourse Direct vs. BigBen Interactive | Bourse Direct vs. ABC arbitrage SA | Bourse Direct vs. CBO Territoria SA | Bourse Direct vs. Aurea 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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