Correlation Between Caffyns PLC and SkinBioTherapeutics
Can any of the company-specific risk be diversified away by investing in both Caffyns PLC and SkinBioTherapeutics 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 Caffyns PLC and SkinBioTherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caffyns PLC and SkinBioTherapeutics PLC, you can compare the effects of market volatilities on Caffyns PLC and SkinBioTherapeutics 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 Caffyns PLC with a short position of SkinBioTherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caffyns PLC and SkinBioTherapeutics.
Diversification Opportunities for Caffyns PLC and SkinBioTherapeutics
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caffyns and SkinBioTherapeutics is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Caffyns PLC and SkinBioTherapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkinBioTherapeutics PLC and Caffyns PLC 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 Caffyns PLC are associated (or correlated) with SkinBioTherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkinBioTherapeutics PLC has no effect on the direction of Caffyns PLC i.e., Caffyns PLC and SkinBioTherapeutics go up and down completely randomly.
Pair Corralation between Caffyns PLC and SkinBioTherapeutics
Assuming the 90 days trading horizon Caffyns PLC is expected to under-perform the SkinBioTherapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Caffyns PLC is 2.54 times less risky than SkinBioTherapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The SkinBioTherapeutics PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,738 in SkinBioTherapeutics PLC on August 30, 2024 and sell it today you would lose (150.00) from holding SkinBioTherapeutics PLC or give up 8.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caffyns PLC vs. SkinBioTherapeutics PLC
Performance |
| Timeline |
| Caffyns PLC |
| SkinBioTherapeutics PLC |
Caffyns PLC and SkinBioTherapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caffyns PLC and SkinBioTherapeutics
The main advantage of trading using opposite Caffyns PLC and SkinBioTherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caffyns PLC position performs unexpectedly, SkinBioTherapeutics 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 SkinBioTherapeutics will offset losses from the drop in SkinBioTherapeutics' long position.| Caffyns PLC vs. Hansa Investment | Caffyns PLC vs. Diversified Energy | Caffyns PLC vs. Evolution Gaming Group | Caffyns PLC vs. Federal Realty Investment |
| SkinBioTherapeutics vs. Samsung Electronics Co | SkinBioTherapeutics vs. Samsung Electronics Co | SkinBioTherapeutics vs. Toyota Motor Corp | SkinBioTherapeutics vs. MOL Hungarian Oil |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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