Correlation Between DIeteren Group and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both DIeteren Group and IMPERIAL TOBACCO 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 DIeteren Group and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIeteren Group SA and IMPERIAL TOBACCO , you can compare the effects of market volatilities on DIeteren Group and IMPERIAL TOBACCO 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 DIeteren Group with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren Group and IMPERIAL TOBACCO.
Diversification Opportunities for DIeteren Group and IMPERIAL TOBACCO
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DIeteren and IMPERIAL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and DIeteren Group 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 DIeteren Group SA are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of DIeteren Group i.e., DIeteren Group and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between DIeteren Group and IMPERIAL TOBACCO
Assuming the 90 days trading horizon DIeteren Group SA is expected to under-perform the IMPERIAL TOBACCO. In addition to that, DIeteren Group is 1.13 times more volatile than IMPERIAL TOBACCO . It trades about -0.25 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.2 per unit of volatility. If you would invest 3,077 in IMPERIAL TOBACCO on October 30, 2024 and sell it today you would earn a total of 91.00 from holding IMPERIAL TOBACCO or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
DIeteren Group SA vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| DIeteren Group SA |
| IMPERIAL TOBACCO |
DIeteren Group and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DIeteren Group and IMPERIAL TOBACCO
The main advantage of trading using opposite DIeteren Group and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIeteren Group position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| DIeteren Group vs. Nucletron Electronic Aktiengesellschaft | DIeteren Group vs. De Grey Mining | DIeteren Group vs. LG Electronics | DIeteren Group vs. Nanjing Panda Electronics |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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