Correlation Between Card Factory and Ceconomy
Can any of the company-specific risk be diversified away by investing in both Card Factory and Ceconomy 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 Card Factory and Ceconomy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Card Factory plc and Ceconomy AG ADR, you can compare the effects of market volatilities on Card Factory and Ceconomy 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 Card Factory with a short position of Ceconomy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Card Factory and Ceconomy.
Diversification Opportunities for Card Factory and Ceconomy
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Card and Ceconomy is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG ADR and Card Factory 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 Card Factory plc are associated (or correlated) with Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of Card Factory i.e., Card Factory and Ceconomy go up and down completely randomly.
Pair Corralation between Card Factory and Ceconomy
Assuming the 90 days horizon Card Factory plc is expected to generate 7.7 times more return on investment than Ceconomy. However, Card Factory is 7.7 times more volatile than Ceconomy AG ADR. It trades about 0.05 of its potential returns per unit of risk. Ceconomy AG ADR is currently generating about 0.04 per unit of risk. If you would invest 2.01 in Card Factory plc on August 27, 2024 and sell it today you would earn a total of 115.99 from holding Card Factory plc or generate 5770.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Card Factory plc vs. Ceconomy AG ADR
Performance |
| Timeline |
| Card Factory plc |
| Ceconomy AG ADR |
Card Factory and Ceconomy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Card Factory and Ceconomy
The main advantage of trading using opposite Card Factory and Ceconomy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Card Factory position performs unexpectedly, Ceconomy 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 Ceconomy will offset losses from the drop in Ceconomy's long position.| Card Factory vs. Dixons Carphone plc | Card Factory vs. Ceconomy AG ADR | Card Factory vs. Tandy Leather Factory | Card Factory vs. Green River Gold |
| Ceconomy vs. Green River Gold | Ceconomy vs. Dixons Carphone plc | Ceconomy vs. Tandy Leather Factory | Ceconomy vs. Card Factory plc |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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