Correlation Between Electrica and International Biotechnology
Can any of the company-specific risk be diversified away by investing in both Electrica and International Biotechnology 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 Electrica and International Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electrica SA and International Biotechnology Trust, you can compare the effects of market volatilities on Electrica and International Biotechnology 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 Electrica with a short position of International Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrica and International Biotechnology.
Diversification Opportunities for Electrica and International Biotechnology
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electrica and International is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Electrica SA and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology and Electrica 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 Electrica SA are associated (or correlated) with International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of Electrica i.e., Electrica and International Biotechnology go up and down completely randomly.
Pair Corralation between Electrica and International Biotechnology
If you would invest 1,300 in Electrica SA on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Electrica SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electrica SA vs. International Biotechnology Tr
Performance |
| Timeline |
| Electrica SA |
| International Biotechnology |
Electrica and International Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electrica and International Biotechnology
The main advantage of trading using opposite Electrica and International Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrica position performs unexpectedly, International Biotechnology 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 International Biotechnology will offset losses from the drop in International Biotechnology's long position.| Electrica vs. Darden Restaurants | Electrica vs. CVS Health Corp | Electrica vs. Various Eateries PLC | Electrica vs. Fulcrum Metals PLC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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