Correlation Between FARM 51 and NEXANS ADR
Can any of the company-specific risk be diversified away by investing in both FARM 51 and NEXANS ADR 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 FARM 51 and NEXANS ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and NEXANS ADR EO, you can compare the effects of market volatilities on FARM 51 and NEXANS ADR 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 FARM 51 with a short position of NEXANS ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and NEXANS ADR.
Diversification Opportunities for FARM 51 and NEXANS ADR
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FARM and NEXANS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and NEXANS ADR EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS ADR EO and FARM 51 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 FARM 51 GROUP are associated (or correlated) with NEXANS ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS ADR EO has no effect on the direction of FARM 51 i.e., FARM 51 and NEXANS ADR go up and down completely randomly.
Pair Corralation between FARM 51 and NEXANS ADR
Assuming the 90 days horizon FARM 51 GROUP is expected to generate 0.72 times more return on investment than NEXANS ADR. However, FARM 51 GROUP is 1.39 times less risky than NEXANS ADR. It trades about 0.16 of its potential returns per unit of risk. NEXANS ADR EO is currently generating about -0.24 per unit of risk. If you would invest 292.00 in FARM 51 GROUP on October 25, 2024 and sell it today you would earn a total of 15.00 from holding FARM 51 GROUP or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. NEXANS ADR EO
Performance |
| Timeline |
| FARM 51 GROUP |
| NEXANS ADR EO |
FARM 51 and NEXANS ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and NEXANS ADR
The main advantage of trading using opposite FARM 51 and NEXANS ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 position performs unexpectedly, NEXANS ADR 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 NEXANS ADR will offset losses from the drop in NEXANS ADR's long position.| FARM 51 vs. Lamar Advertising | FARM 51 vs. TOMBADOR IRON LTD | FARM 51 vs. ANGANG STEEL H | FARM 51 vs. CARSALESCOM |
| NEXANS ADR vs. COMBA TELECOM SYST | NEXANS ADR vs. FARM 51 GROUP | NEXANS ADR vs. Singapore Telecommunications Limited | NEXANS ADR vs. Penta Ocean Construction Co |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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