Correlation Between Central Europe and Ashmore Group
Can any of the company-specific risk be diversified away by investing in both Central Europe and Ashmore Group 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 Europe and Ashmore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Europe Russia and Ashmore Group Plc, you can compare the effects of market volatilities on Central Europe and Ashmore Group 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 Europe with a short position of Ashmore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Europe and Ashmore Group.
Diversification Opportunities for Central Europe and Ashmore Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Central and Ashmore is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Central Europe Russia and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc and Central Europe 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 Europe Russia are associated (or correlated) with Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of Central Europe i.e., Central Europe and Ashmore Group go up and down completely randomly.
Pair Corralation between Central Europe and Ashmore Group
Considering the 90-day investment horizon Central Europe Russia is expected to generate 0.48 times more return on investment than Ashmore Group. However, Central Europe Russia is 2.08 times less risky than Ashmore Group. It trades about 0.07 of its potential returns per unit of risk. Ashmore Group Plc is currently generating about 0.01 per unit of risk. If you would invest 829.00 in Central Europe Russia on August 31, 2024 and sell it today you would earn a total of 359.00 from holding Central Europe Russia or generate 43.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 71.39% |
| Values | Daily Returns |
Central Europe Russia vs. Ashmore Group Plc
Performance |
| Timeline |
| Central Europe Russia |
| Ashmore Group Plc |
Central Europe and Ashmore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Europe and Ashmore Group
The main advantage of trading using opposite Central Europe and Ashmore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Europe position performs unexpectedly, Ashmore Group 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 Ashmore Group will offset losses from the drop in Ashmore Group's long position.| Central Europe vs. Mexico Closed | Central Europe vs. NXG NextGen Infrastructure | Central Europe vs. Taiwan Closed | Central Europe vs. Japan Smaller Capitalization |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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