Correlation Between Central Asia and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Central Asia and Electronic Arts 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 Central Asia and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and Electronic Arts, you can compare the effects of market volatilities on Central Asia and Electronic Arts 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 Central Asia with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Electronic Arts.
Diversification Opportunities for Central Asia and Electronic Arts
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Central and Electronic is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Central Asia 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 Central Asia Metals are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Central Asia i.e., Central Asia and Electronic Arts go up and down completely randomly.
Pair Corralation between Central Asia and Electronic Arts
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Electronic Arts. In addition to that, Central Asia is 1.71 times more volatile than Electronic Arts. It trades about -0.07 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.14 per unit of volatility. If you would invest 13,748 in Electronic Arts on September 3, 2024 and sell it today you would earn a total of 2,789 from holding Electronic Arts or generate 20.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. Electronic Arts
Performance |
| Timeline |
| Central Asia Metals |
| Electronic Arts |
Central Asia and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Electronic Arts
The main advantage of trading using opposite Central Asia and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| Central Asia vs. The Investment | Central Asia vs. Erste Group Bank | Central Asia vs. Alior Bank SA | Central Asia vs. Herald Investment Trust |
| Electronic Arts vs. The Mercantile Investment | Electronic Arts vs. Southwest Airlines Co | Electronic Arts vs. Futura Medical | Electronic Arts vs. United Airlines Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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