Correlation Between Electroarges and Teraplast Bist
Can any of the company-specific risk be diversified away by investing in both Electroarges and Teraplast Bist 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 Teraplast Bist into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electroarges S and Teraplast Bist, you can compare the effects of market volatilities on Electroarges and Teraplast Bist 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 Teraplast Bist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electroarges and Teraplast Bist.
Diversification Opportunities for Electroarges and Teraplast Bist
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Electroarges and Teraplast is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Electroarges S and Teraplast Bist in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teraplast Bist 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 Teraplast Bist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teraplast Bist has no effect on the direction of Electroarges i.e., Electroarges and Teraplast Bist go up and down completely randomly.
Pair Corralation between Electroarges and Teraplast Bist
Assuming the 90 days trading horizon Electroarges S is expected to generate 7.24 times more return on investment than Teraplast Bist. However, Electroarges is 7.24 times more volatile than Teraplast Bist. It trades about -0.02 of its potential returns per unit of risk. Teraplast Bist is currently generating about -0.27 per unit of risk. If you would invest 14.00 in Electroarges S on October 24, 2024 and sell it today you would lose (1.00) from holding Electroarges S or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electroarges S vs. Teraplast Bist
Performance |
| Timeline |
| Electroarges S |
| Teraplast Bist |
Electroarges and Teraplast Bist Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electroarges and Teraplast Bist
The main advantage of trading using opposite Electroarges and Teraplast Bist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electroarges position performs unexpectedly, Teraplast Bist 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 Teraplast Bist will offset losses from the drop in Teraplast Bist's long position.| Electroarges vs. Digi Communications NV | Electroarges vs. Evergent Investments SA | Electroarges vs. Turism Hotelur | Electroarges vs. Infinity Capital Investments |
| Teraplast Bist vs. GRUPUL INDUSTRIAL ELECTROCONTACT | Teraplast Bist vs. Compania Hoteliera InterContinental | Teraplast Bist vs. TRANSILVANIA INVESTMENTS ALLIANCE | Teraplast Bist vs. Erste Group Bank |
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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