Correlation Between Continental Aktiengesellscha and SRI TRANG
Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and SRI TRANG 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 Continental Aktiengesellscha and SRI TRANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Aktiengesellschaft and SRI TRANG AGR FOR , you can compare the effects of market volatilities on Continental Aktiengesellscha and SRI TRANG 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 Continental Aktiengesellscha with a short position of SRI TRANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and SRI TRANG.
Diversification Opportunities for Continental Aktiengesellscha and SRI TRANG
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Continental and SRI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and SRI TRANG AGR FOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRI TRANG AGR and Continental Aktiengesellscha 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 Continental Aktiengesellschaft are associated (or correlated) with SRI TRANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRI TRANG AGR has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and SRI TRANG go up and down completely randomly.
Pair Corralation between Continental Aktiengesellscha and SRI TRANG
Assuming the 90 days trading horizon Continental Aktiengesellschaft is expected to generate 0.62 times more return on investment than SRI TRANG. However, Continental Aktiengesellschaft is 1.62 times less risky than SRI TRANG. It trades about -0.06 of its potential returns per unit of risk. SRI TRANG AGR FOR is currently generating about -0.05 per unit of risk. If you would invest 7,124 in Continental Aktiengesellschaft on January 24, 2025 and sell it today you would lose (252.00) from holding Continental Aktiengesellschaft or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Aktiengesellschaft vs. SRI TRANG AGR FOR
Performance |
| Timeline |
| Continental Aktiengesellscha |
| SRI TRANG AGR |
Continental Aktiengesellscha and SRI TRANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Aktiengesellscha and SRI TRANG
The main advantage of trading using opposite Continental Aktiengesellscha and SRI TRANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, SRI TRANG 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 SRI TRANG will offset losses from the drop in SRI TRANG's long position.The idea behind Continental Aktiengesellschaft and SRI TRANG AGR FOR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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