Correlation Between Consultatio and Ferrum SA
Can any of the company-specific risk be diversified away by investing in both Consultatio and Ferrum SA 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 Consultatio and Ferrum SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consultatio SA and Ferrum SA, you can compare the effects of market volatilities on Consultatio and Ferrum SA 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 Consultatio with a short position of Ferrum SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consultatio and Ferrum SA.
Diversification Opportunities for Consultatio and Ferrum SA
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Consultatio and Ferrum is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Consultatio SA and Ferrum SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrum SA and Consultatio 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 Consultatio SA are associated (or correlated) with Ferrum SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrum SA has no effect on the direction of Consultatio i.e., Consultatio and Ferrum SA go up and down completely randomly.
Pair Corralation between Consultatio and Ferrum SA
Assuming the 90 days trading horizon Consultatio SA is expected to generate 0.94 times more return on investment than Ferrum SA. However, Consultatio SA is 1.06 times less risky than Ferrum SA. It trades about 0.11 of its potential returns per unit of risk. Ferrum SA is currently generating about 0.09 per unit of risk. If you would invest 242,000 in Consultatio SA on October 24, 2024 and sell it today you would earn a total of 11,000 from holding Consultatio SA or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consultatio SA vs. Ferrum SA
Performance |
| Timeline |
| Consultatio SA |
| Ferrum SA |
Consultatio and Ferrum SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consultatio and Ferrum SA
The main advantage of trading using opposite Consultatio and Ferrum SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consultatio position performs unexpectedly, Ferrum SA 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 Ferrum SA will offset losses from the drop in Ferrum SA's long position.| Consultatio vs. Transportadora de Gas | Consultatio vs. Compania de Transporte | Consultatio vs. Agrometal SAI | Consultatio vs. United States Steel |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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