Correlation Between Cyber Security and 4C Group
Can any of the company-specific risk be diversified away by investing in both Cyber Security and 4C Group 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 Cyber Security and 4C Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cyber Security 1 and 4C Group AB, you can compare the effects of market volatilities on Cyber Security and 4C Group 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 Cyber Security with a short position of 4C Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyber Security and 4C Group.
Diversification Opportunities for Cyber Security and 4C Group
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cyber and 4C Group is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cyber Security 1 and 4C Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4C Group AB and Cyber Security 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 Cyber Security 1 are associated (or correlated) with 4C Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4C Group AB has no effect on the direction of Cyber Security i.e., Cyber Security and 4C Group go up and down completely randomly.
Pair Corralation between Cyber Security and 4C Group
Assuming the 90 days trading horizon Cyber Security 1 is expected to under-perform the 4C Group. In addition to that, Cyber Security is 1.73 times more volatile than 4C Group AB. It trades about -0.2 of its total potential returns per unit of risk. 4C Group AB is currently generating about -0.3 per unit of volatility. If you would invest 1,595 in 4C Group AB on September 24, 2024 and sell it today you would lose (560.00) from holding 4C Group AB or give up 35.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cyber Security 1 vs. 4C Group AB
Performance |
| Timeline |
| Cyber Security 1 |
| 4C Group AB |
Cyber Security and 4C Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cyber Security and 4C Group
The main advantage of trading using opposite Cyber Security and 4C Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cyber Security position performs unexpectedly, 4C Group 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 4C Group will offset losses from the drop in 4C Group's long position.The idea behind Cyber Security 1 and 4C Group AB 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.| 4C Group vs. B3 Consulting Group | 4C Group vs. Sleep Cycle AB | 4C Group vs. Avensia publ AB | 4C Group vs. CAG Group AB |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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