Correlation Between CeoTronics and Major Drilling
Can any of the company-specific risk be diversified away by investing in both CeoTronics and Major Drilling 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 CeoTronics and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CeoTronics AG and Major Drilling Group, you can compare the effects of market volatilities on CeoTronics and Major Drilling 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 CeoTronics with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of CeoTronics and Major Drilling.
Diversification Opportunities for CeoTronics and Major Drilling
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CeoTronics and Major is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and CeoTronics 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 CeoTronics AG are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of CeoTronics i.e., CeoTronics and Major Drilling go up and down completely randomly.
Pair Corralation between CeoTronics and Major Drilling
Assuming the 90 days trading horizon CeoTronics AG is expected to generate 1.06 times more return on investment than Major Drilling. However, CeoTronics is 1.06 times more volatile than Major Drilling Group. It trades about 0.04 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest 414.00 in CeoTronics AG on September 24, 2024 and sell it today you would earn a total of 171.00 from holding CeoTronics AG or generate 41.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CeoTronics AG vs. Major Drilling Group
Performance |
| Timeline |
| CeoTronics AG |
| Major Drilling Group |
CeoTronics and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CeoTronics and Major Drilling
The main advantage of trading using opposite CeoTronics and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| CeoTronics vs. PLAYTIKA HOLDING DL 01 | CeoTronics vs. PROSIEBENSAT1 MEDIADR4 | CeoTronics vs. Ubisoft Entertainment SA | CeoTronics vs. GigaMedia |
| Major Drilling vs. Carsales | Major Drilling vs. SALESFORCE INC CDR | Major Drilling vs. Carnegie Clean Energy | Major Drilling vs. CarsalesCom |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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