Correlation Between CeoTronics and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both CeoTronics and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CeoTronics AG and IMPERIAL TOBACCO , you can compare the effects of market volatilities on CeoTronics and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of CeoTronics and IMPERIAL TOBACCO.
Diversification Opportunities for CeoTronics and IMPERIAL TOBACCO
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CeoTronics and IMPERIAL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of CeoTronics i.e., CeoTronics and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between CeoTronics and IMPERIAL TOBACCO
Assuming the 90 days trading horizon CeoTronics is expected to generate 21.05 times less return on investment than IMPERIAL TOBACCO. In addition to that, CeoTronics is 1.68 times more volatile than IMPERIAL TOBACCO . It trades about 0.01 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.36 per unit of volatility. If you would invest 2,585 in IMPERIAL TOBACCO on August 29, 2024 and sell it today you would earn a total of 519.00 from holding IMPERIAL TOBACCO or generate 20.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CeoTronics AG vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| CeoTronics AG |
| IMPERIAL TOBACCO |
CeoTronics and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CeoTronics and IMPERIAL TOBACCO
The main advantage of trading using opposite CeoTronics and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| CeoTronics vs. Cisco Systems | CeoTronics vs. Superior Plus Corp | CeoTronics vs. SIVERS SEMICONDUCTORS AB | CeoTronics vs. Talanx AG |
| IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Superior Plus Corp | IMPERIAL TOBACCO vs. SIVERS SEMICONDUCTORS AB |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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