Correlation Between CodeMill and ChargePanel
Can any of the company-specific risk be diversified away by investing in both CodeMill and ChargePanel 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 CodeMill and ChargePanel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CodeMill AB and ChargePanel AB, you can compare the effects of market volatilities on CodeMill and ChargePanel 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 CodeMill with a short position of ChargePanel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CodeMill and ChargePanel.
Diversification Opportunities for CodeMill and ChargePanel
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CodeMill and ChargePanel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CodeMill AB and ChargePanel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChargePanel AB and CodeMill 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 CodeMill AB are associated (or correlated) with ChargePanel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChargePanel AB has no effect on the direction of CodeMill i.e., CodeMill and ChargePanel go up and down completely randomly.
Pair Corralation between CodeMill and ChargePanel
Assuming the 90 days trading horizon CodeMill AB is expected to generate 2.57 times more return on investment than ChargePanel. However, CodeMill is 2.57 times more volatile than ChargePanel AB. It trades about 0.24 of its potential returns per unit of risk. ChargePanel AB is currently generating about -0.39 per unit of risk. If you would invest 1,300 in CodeMill AB on September 4, 2024 and sell it today you would earn a total of 310.00 from holding CodeMill AB or generate 23.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CodeMill AB vs. ChargePanel AB
Performance |
| Timeline |
| CodeMill AB |
| ChargePanel AB |
CodeMill and ChargePanel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CodeMill and ChargePanel
The main advantage of trading using opposite CodeMill and ChargePanel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CodeMill position performs unexpectedly, ChargePanel 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 ChargePanel will offset losses from the drop in ChargePanel's long position.The idea behind CodeMill AB and ChargePanel AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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