Correlation Between Edita Food and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Edita Food and Flow Traders 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 Edita Food and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Flow Traders NV, you can compare the effects of market volatilities on Edita Food and Flow Traders 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 Edita Food with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Flow Traders.
Diversification Opportunities for Edita Food and Flow Traders
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Edita and Flow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV and Edita Food 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 Edita Food Industries are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Edita Food i.e., Edita Food and Flow Traders go up and down completely randomly.
Pair Corralation between Edita Food and Flow Traders
Assuming the 90 days trading horizon Edita Food Industries is expected to under-perform the Flow Traders. In addition to that, Edita Food is 2.67 times more volatile than Flow Traders NV. It trades about -0.07 of its total potential returns per unit of risk. Flow Traders NV is currently generating about 0.26 per unit of volatility. If you would invest 1,724 in Flow Traders NV on August 31, 2024 and sell it today you would earn a total of 397.00 from holding Flow Traders NV or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edita Food Industries vs. Flow Traders NV
Performance |
| Timeline |
| Edita Food Industries |
| Flow Traders NV |
Edita Food and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Flow Traders
The main advantage of trading using opposite Edita Food and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Edita Food vs. Live Nation Entertainment | Edita Food vs. mobilezone holding AG | Edita Food vs. Zinc Media Group | Edita Food vs. Grand Vision Media |
| Flow Traders vs. Central Asia Metals | Flow Traders vs. Taiwan Semiconductor Manufacturing | Flow Traders vs. Sovereign Metals | Flow Traders vs. Jacquet Metal Service |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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