Correlation Between Erbud SA and Gobarto SA
Can any of the company-specific risk be diversified away by investing in both Erbud SA and Gobarto 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 Erbud SA and Gobarto SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erbud SA and Gobarto SA, you can compare the effects of market volatilities on Erbud SA and Gobarto 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 Erbud SA with a short position of Gobarto SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erbud SA and Gobarto SA.
Diversification Opportunities for Erbud SA and Gobarto SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erbud and Gobarto is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Erbud SA and Gobarto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gobarto SA and Erbud SA 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 Erbud SA are associated (or correlated) with Gobarto SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gobarto SA has no effect on the direction of Erbud SA i.e., Erbud SA and Gobarto SA go up and down completely randomly.
Pair Corralation between Erbud SA and Gobarto SA
Assuming the 90 days trading horizon Erbud SA is expected to generate 6.93 times less return on investment than Gobarto SA. But when comparing it to its historical volatility, Erbud SA is 1.92 times less risky than Gobarto SA. It trades about 0.02 of its potential returns per unit of risk. Gobarto SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 820.00 in Gobarto SA on November 2, 2024 and sell it today you would earn a total of 1,810 from holding Gobarto SA or generate 220.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erbud SA vs. Gobarto SA
Performance |
| Timeline |
| Erbud SA |
| Gobarto SA |
Erbud SA and Gobarto SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erbud SA and Gobarto SA
The main advantage of trading using opposite Erbud SA and Gobarto SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erbud SA position performs unexpectedly, Gobarto 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 Gobarto SA will offset losses from the drop in Gobarto SA's long position.| Erbud SA vs. mBank SA | Erbud SA vs. Bank Millennium SA | Erbud SA vs. Globe Trade Centre | Erbud SA vs. Drago entertainment SA |
| Gobarto SA vs. Gamedust SA | Gobarto SA vs. LSI Software SA | Gobarto SA vs. Drago entertainment SA | Gobarto SA vs. CI Games SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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