Correlation Between Compagnie and Union Technologies
Can any of the company-specific risk be diversified away by investing in both Compagnie and Union Technologies 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 Compagnie and Union Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie du Cambodge and Union Technologies Informatique, you can compare the effects of market volatilities on Compagnie and Union Technologies 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 Compagnie with a short position of Union Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Union Technologies.
Diversification Opportunities for Compagnie and Union Technologies
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compagnie and Union is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Cambodge and Union Technologies Informatiqu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Technologies and Compagnie 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 Compagnie du Cambodge are associated (or correlated) with Union Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Technologies has no effect on the direction of Compagnie i.e., Compagnie and Union Technologies go up and down completely randomly.
Pair Corralation between Compagnie and Union Technologies
Assuming the 90 days trading horizon Compagnie du Cambodge is expected to generate 0.6 times more return on investment than Union Technologies. However, Compagnie du Cambodge is 1.66 times less risky than Union Technologies. It trades about 0.15 of its potential returns per unit of risk. Union Technologies Informatique is currently generating about 0.03 per unit of risk. If you would invest 7,650 in Compagnie du Cambodge on November 28, 2024 and sell it today you would earn a total of 5,200 from holding Compagnie du Cambodge or generate 67.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.8% |
| Values | Daily Returns |
Compagnie du Cambodge vs. Union Technologies Informatiqu
Performance |
| Timeline |
| Compagnie du Cambodge |
| Union Technologies |
Compagnie and Union Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Union Technologies
The main advantage of trading using opposite Compagnie and Union Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Union Technologies 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 Union Technologies will offset losses from the drop in Union Technologies' long position.| Compagnie vs. ISPD Network SA | Compagnie vs. Hitechpros | Compagnie vs. Onlineformapro SA | Compagnie vs. Eutelsat Communications SA |
| Union Technologies vs. ACTEOS SA | Union Technologies vs. Memscap Regpt | Union Technologies vs. Linedata Services SA | Union Technologies vs. Lectra 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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