Correlation Between Foodlink and Profile Systems
Can any of the company-specific risk be diversified away by investing in both Foodlink and Profile Systems 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 Profile Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foodlink AE and Profile Systems Software, you can compare the effects of market volatilities on Foodlink and Profile Systems 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 Profile Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodlink and Profile Systems.
Diversification Opportunities for Foodlink and Profile Systems
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Foodlink and Profile is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Foodlink AE and Profile Systems Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profile Systems Software 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 Profile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profile Systems Software has no effect on the direction of Foodlink i.e., Foodlink and Profile Systems go up and down completely randomly.
Pair Corralation between Foodlink and Profile Systems
Assuming the 90 days trading horizon Foodlink AE is expected to generate 2.34 times more return on investment than Profile Systems. However, Foodlink is 2.34 times more volatile than Profile Systems Software. It trades about 0.1 of its potential returns per unit of risk. Profile Systems Software is currently generating about -0.08 per unit of risk. If you would invest 43.00 in Foodlink AE on November 9, 2024 and sell it today you would earn a total of 2.00 from holding Foodlink AE or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foodlink AE vs. Profile Systems Software
Performance |
| Timeline |
| Foodlink AE |
| Profile Systems Software |
Foodlink and Profile Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foodlink and Profile Systems
The main advantage of trading using opposite Foodlink and Profile Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foodlink position performs unexpectedly, Profile Systems 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 Profile Systems will offset losses from the drop in Profile Systems' long position.| Foodlink vs. Frigoglass SAIC | Foodlink vs. Autohellas SA | Foodlink vs. Public Power | Foodlink vs. Intralot SA Integrated |
| Profile Systems vs. Terna Energy Societe | Profile Systems vs. Mytilineos SA | Profile Systems vs. Public Power | Profile Systems vs. Autohellas 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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