Correlation Between CENTRICA ADR and CeoTronics
Can any of the company-specific risk be diversified away by investing in both CENTRICA ADR and CeoTronics 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 CENTRICA ADR and CeoTronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTRICA ADR NEW and CeoTronics AG, you can compare the effects of market volatilities on CENTRICA ADR and CeoTronics 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 CENTRICA ADR with a short position of CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTRICA ADR and CeoTronics.
Diversification Opportunities for CENTRICA ADR and CeoTronics
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CENTRICA and CeoTronics is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CENTRICA ADR NEW and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG and CENTRICA ADR 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 CENTRICA ADR NEW are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of CENTRICA ADR i.e., CENTRICA ADR and CeoTronics go up and down completely randomly.
Pair Corralation between CENTRICA ADR and CeoTronics
Assuming the 90 days trading horizon CENTRICA ADR NEW is expected to under-perform the CeoTronics. But the stock apears to be less risky and, when comparing its historical volatility, CENTRICA ADR NEW is 1.32 times less risky than CeoTronics. The stock trades about -0.01 of its potential returns per unit of risk. The CeoTronics AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 632.00 in CeoTronics AG on September 3, 2024 and sell it today you would earn a total of 8.00 from holding CeoTronics AG or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTRICA ADR NEW vs. CeoTronics AG
Performance |
| Timeline |
| CENTRICA ADR NEW |
| CeoTronics AG |
CENTRICA ADR and CeoTronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTRICA ADR and CeoTronics
The main advantage of trading using opposite CENTRICA ADR and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTRICA ADR position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.| CENTRICA ADR vs. CeoTronics AG | CENTRICA ADR vs. MOLSON RS BEVERAGE | CENTRICA ADR vs. EPSILON HEALTHCARE LTD | CENTRICA ADR vs. Collins Foods Limited |
| CeoTronics vs. 24SEVENOFFICE GROUP AB | CeoTronics vs. AUSTEVOLL SEAFOOD | CeoTronics vs. Lery Seafood Group | CeoTronics vs. Mobilezone Holding AG |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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