Correlation Between Foodlink and CPI Computer
Can any of the company-specific risk be diversified away by investing in both Foodlink and CPI Computer 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 Foodlink and CPI Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foodlink AE and CPI Computer Peripherals, you can compare the effects of market volatilities on Foodlink and CPI Computer 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 Foodlink with a short position of CPI Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodlink and CPI Computer.
Diversification Opportunities for Foodlink and CPI Computer
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foodlink and CPI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Foodlink AE and CPI Computer Peripherals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Computer Peripherals and Foodlink 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 Foodlink AE are associated (or correlated) with CPI Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Computer Peripherals has no effect on the direction of Foodlink i.e., Foodlink and CPI Computer go up and down completely randomly.
Pair Corralation between Foodlink and CPI Computer
Assuming the 90 days trading horizon Foodlink AE is expected to generate 1.09 times more return on investment than CPI Computer. However, Foodlink is 1.09 times more volatile than CPI Computer Peripherals. It trades about 0.0 of its potential returns per unit of risk. CPI Computer Peripherals is currently generating about 0.0 per unit of risk. If you would invest 45.00 in Foodlink AE on August 24, 2024 and sell it today you would lose (9.00) from holding Foodlink AE or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.33% |
| Values | Daily Returns |
Foodlink AE vs. CPI Computer Peripherals
Performance |
| Timeline |
| Foodlink AE |
| CPI Computer Peripherals |
Foodlink and CPI Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foodlink and CPI Computer
The main advantage of trading using opposite Foodlink and CPI Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foodlink position performs unexpectedly, CPI Computer 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 CPI Computer will offset losses from the drop in CPI Computer's long position.| Foodlink vs. Frigoglass SAIC | Foodlink vs. Autohellas SA | Foodlink vs. Public Power | Foodlink vs. Intralot SA Integrated |
| CPI Computer vs. Quest Holdings SA | CPI Computer vs. Performance Technologies SA | CPI Computer vs. National Bank of | CPI Computer vs. EL D Mouzakis |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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