Correlation Between CeoTronics and Sims Metal
Can any of the company-specific risk be diversified away by investing in both CeoTronics and Sims Metal 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 Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CeoTronics AG and Sims Metal Management, you can compare the effects of market volatilities on CeoTronics and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CeoTronics and Sims Metal.
Diversification Opportunities for CeoTronics and Sims Metal
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CeoTronics and Sims is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of CeoTronics i.e., CeoTronics and Sims Metal go up and down completely randomly.
Pair Corralation between CeoTronics and Sims Metal
Assuming the 90 days trading horizon CeoTronics AG is expected to generate 1.11 times more return on investment than Sims Metal. However, CeoTronics is 1.11 times more volatile than Sims Metal Management. It trades about 0.04 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.0 per unit of risk. If you would invest 429.00 in CeoTronics AG on August 31, 2024 and sell it today you would earn a total of 161.00 from holding CeoTronics AG or generate 37.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CeoTronics AG vs. Sims Metal Management
Performance |
| Timeline |
| CeoTronics AG |
| Sims Metal Management |
CeoTronics and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CeoTronics and Sims Metal
The main advantage of trading using opposite CeoTronics and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| CeoTronics vs. Motorola Solutions | CeoTronics vs. Nokia | CeoTronics vs. ZTE Corporation | CeoTronics vs. Hewlett Packard Enterprise |
| Sims Metal vs. SALESFORCE INC CDR | Sims Metal vs. CARSALESCOM | Sims Metal vs. ADRIATIC METALS LS 013355 | Sims Metal vs. AAC TECHNOLOGHLDGADR |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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