Correlation Between Selected Textiles and Dromeas SA
Can any of the company-specific risk be diversified away by investing in both Selected Textiles and Dromeas 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 Selected Textiles and Dromeas SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selected Textiles SA and Dromeas SA, you can compare the effects of market volatilities on Selected Textiles and Dromeas 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 Selected Textiles with a short position of Dromeas SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selected Textiles and Dromeas SA.
Diversification Opportunities for Selected Textiles and Dromeas SA
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Selected and Dromeas is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Selected Textiles SA and Dromeas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dromeas SA and Selected Textiles 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 Selected Textiles SA are associated (or correlated) with Dromeas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dromeas SA has no effect on the direction of Selected Textiles i.e., Selected Textiles and Dromeas SA go up and down completely randomly.
Pair Corralation between Selected Textiles and Dromeas SA
Assuming the 90 days trading horizon Selected Textiles SA is expected to generate 1.49 times more return on investment than Dromeas SA. However, Selected Textiles is 1.49 times more volatile than Dromeas SA. It trades about 0.0 of its potential returns per unit of risk. Dromeas SA is currently generating about -0.01 per unit of risk. If you would invest 14.00 in Selected Textiles SA on August 30, 2024 and sell it today you would lose (1.00) from holding Selected Textiles SA or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.6% |
| Values | Daily Returns |
Selected Textiles SA vs. Dromeas SA
Performance |
| Timeline |
| Selected Textiles |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Dromeas SA |
Selected Textiles and Dromeas SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selected Textiles and Dromeas SA
The main advantage of trading using opposite Selected Textiles and Dromeas SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selected Textiles position performs unexpectedly, Dromeas 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 Dromeas SA will offset losses from the drop in Dromeas SA's long position.| Selected Textiles vs. Lanakam SA | Selected Textiles vs. Bioter SA | Selected Textiles vs. Avax SA | Selected Textiles vs. National Bank of |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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