Correlation Between Famous Brands and Astoria Investments
Can any of the company-specific risk be diversified away by investing in both Famous Brands and Astoria Investments 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 Famous Brands and Astoria Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Famous Brands and Astoria Investments, you can compare the effects of market volatilities on Famous Brands and Astoria Investments 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 Famous Brands with a short position of Astoria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Famous Brands and Astoria Investments.
Diversification Opportunities for Famous Brands and Astoria Investments
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Famous and Astoria is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Famous Brands and Astoria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astoria Investments and Famous Brands 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 Famous Brands are associated (or correlated) with Astoria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astoria Investments has no effect on the direction of Famous Brands i.e., Famous Brands and Astoria Investments go up and down completely randomly.
Pair Corralation between Famous Brands and Astoria Investments
Assuming the 90 days trading horizon Famous Brands is expected to generate 0.94 times more return on investment than Astoria Investments. However, Famous Brands is 1.07 times less risky than Astoria Investments. It trades about 0.19 of its potential returns per unit of risk. Astoria Investments is currently generating about 0.05 per unit of risk. If you would invest 631,700 in Famous Brands on August 30, 2024 and sell it today you would earn a total of 44,100 from holding Famous Brands or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Famous Brands vs. Astoria Investments
Performance |
| Timeline |
| Famous Brands |
| Astoria Investments |
Famous Brands and Astoria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Famous Brands and Astoria Investments
The main advantage of trading using opposite Famous Brands and Astoria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Famous Brands position performs unexpectedly, Astoria Investments 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 Astoria Investments will offset losses from the drop in Astoria Investments' long position.| Famous Brands vs. Sasol Ltd Bee | Famous Brands vs. Centaur Bci Balanced | Famous Brands vs. Sabvest Capital | Famous Brands vs. Growthpoint Properties |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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