Correlation Between CIA ENGER and C PARAN
Can any of the company-specific risk be diversified away by investing in both CIA ENGER and C PARAN 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 CIA ENGER and C PARAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIA ENGER ADR and C PARAN EN, you can compare the effects of market volatilities on CIA ENGER and C PARAN 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 CIA ENGER with a short position of C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIA ENGER and C PARAN.
Diversification Opportunities for CIA ENGER and C PARAN
Good diversification
The 3 months correlation between CIA and ELP1 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CIA ENGER ADR and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN and CIA ENGER 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 CIA ENGER ADR are associated (or correlated) with C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of CIA ENGER i.e., CIA ENGER and C PARAN go up and down completely randomly.
Pair Corralation between CIA ENGER and C PARAN
Assuming the 90 days trading horizon CIA ENGER ADR is expected to generate 0.28 times more return on investment than C PARAN. However, CIA ENGER ADR is 3.62 times less risky than C PARAN. It trades about 0.07 of its potential returns per unit of risk. C PARAN EN is currently generating about -0.02 per unit of risk. If you would invest 212.00 in CIA ENGER ADR on September 12, 2024 and sell it today you would earn a total of 2.00 from holding CIA ENGER ADR or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
CIA ENGER ADR vs. C PARAN EN
Performance |
| Timeline |
| CIA ENGER ADR |
| C PARAN EN |
CIA ENGER and C PARAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIA ENGER and C PARAN
The main advantage of trading using opposite CIA ENGER and C PARAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIA ENGER position performs unexpectedly, C PARAN 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 C PARAN will offset losses from the drop in C PARAN's long position.| CIA ENGER vs. ASSOC BR FOODS | CIA ENGER vs. Tencent Music Entertainment | CIA ENGER vs. Associated British Foods | CIA ENGER vs. Dave Busters Entertainment |
| C PARAN vs. USWE SPORTS AB | C PARAN vs. United Rentals | C PARAN vs. AUTO TRADER ADR | C PARAN vs. Ming Le Sports |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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