Correlation Between East Africa and DIeteren
Can any of the company-specific risk be diversified away by investing in both East Africa and DIeteren 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 East Africa and DIeteren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and DIeteren NV ADR, you can compare the effects of market volatilities on East Africa and DIeteren 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 East Africa with a short position of DIeteren. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and DIeteren.
Diversification Opportunities for East Africa and DIeteren
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between East and DIeteren is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and DIeteren NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren NV ADR and East Africa 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 East Africa Metals are associated (or correlated) with DIeteren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren NV ADR has no effect on the direction of East Africa i.e., East Africa and DIeteren go up and down completely randomly.
Pair Corralation between East Africa and DIeteren
If you would invest 10,651 in DIeteren NV ADR on September 12, 2024 and sell it today you would earn a total of 92.00 from holding DIeteren NV ADR or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
East Africa Metals vs. DIeteren NV ADR
Performance |
| Timeline |
| East Africa Metals |
| DIeteren NV ADR |
East Africa and DIeteren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and DIeteren
The main advantage of trading using opposite East Africa and DIeteren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, DIeteren 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 DIeteren will offset losses from the drop in DIeteren's long position.| East Africa vs. Advantage Solutions | East Africa vs. Atlas Corp | East Africa vs. PureCycle Technologies | East Africa vs. WM Technology |
| DIeteren vs. Perseus Mining Limited | DIeteren vs. United Parks Resorts | DIeteren vs. East Africa Metals | DIeteren vs. Life Time Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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