Correlation Between Electroprecizia and IAR SA
Can any of the company-specific risk be diversified away by investing in both Electroprecizia and IAR 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 Electroprecizia and IAR SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electroprecizia SA and IAR SA, you can compare the effects of market volatilities on Electroprecizia and IAR 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 Electroprecizia with a short position of IAR SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electroprecizia and IAR SA.
Diversification Opportunities for Electroprecizia and IAR SA
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electroprecizia and IAR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Electroprecizia SA and IAR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR SA and Electroprecizia 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 Electroprecizia SA are associated (or correlated) with IAR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR SA has no effect on the direction of Electroprecizia i.e., Electroprecizia and IAR SA go up and down completely randomly.
Pair Corralation between Electroprecizia and IAR SA
Assuming the 90 days trading horizon Electroprecizia SA is expected to generate 1.38 times more return on investment than IAR SA. However, Electroprecizia is 1.38 times more volatile than IAR SA. It trades about 0.02 of its potential returns per unit of risk. IAR SA is currently generating about -0.07 per unit of risk. If you would invest 1,380 in Electroprecizia SA on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Electroprecizia SA or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electroprecizia SA vs. IAR SA
Performance |
| Timeline |
| Electroprecizia SA |
| IAR SA |
Electroprecizia and IAR SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electroprecizia and IAR SA
The main advantage of trading using opposite Electroprecizia and IAR SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electroprecizia position performs unexpectedly, IAR 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 IAR SA will offset losses from the drop in IAR SA's long position.The idea behind Electroprecizia SA and IAR 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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