Correlation Between Electroarges and Comvex SA
Can any of the company-specific risk be diversified away by investing in both Electroarges and Comvex 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 Electroarges and Comvex SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electroarges S and Comvex SA, you can compare the effects of market volatilities on Electroarges and Comvex 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 Electroarges with a short position of Comvex SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electroarges and Comvex SA.
Diversification Opportunities for Electroarges and Comvex SA
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Electroarges and Comvex is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Electroarges S and Comvex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comvex SA and Electroarges 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 Electroarges S are associated (or correlated) with Comvex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comvex SA has no effect on the direction of Electroarges i.e., Electroarges and Comvex SA go up and down completely randomly.
Pair Corralation between Electroarges and Comvex SA
Assuming the 90 days trading horizon Electroarges S is expected to under-perform the Comvex SA. In addition to that, Electroarges is 1.3 times more volatile than Comvex SA. It trades about -0.03 of its total potential returns per unit of risk. Comvex SA is currently generating about 0.07 per unit of volatility. If you would invest 3,035 in Comvex SA on August 28, 2024 and sell it today you would earn a total of 5,165 from holding Comvex SA or generate 170.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 78.09% |
| Values | Daily Returns |
Electroarges S vs. Comvex SA
Performance |
| Timeline |
| Electroarges S |
| Comvex SA |
Electroarges and Comvex SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electroarges and Comvex SA
The main advantage of trading using opposite Electroarges and Comvex SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electroarges position performs unexpectedly, Comvex 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 Comvex SA will offset losses from the drop in Comvex SA's long position.The idea behind Electroarges S and Comvex SA 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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