Correlation Between Fras Le and Hrcules SA
Can any of the company-specific risk be diversified away by investing in both Fras Le and Hrcules 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 Fras Le and Hrcules SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and Hrcules SA , you can compare the effects of market volatilities on Fras Le and Hrcules 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 Fras Le with a short position of Hrcules SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Hrcules SA.
Diversification Opportunities for Fras Le and Hrcules SA
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fras and Hrcules is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Hrcules SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrcules SA and Fras Le 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 Fras le SA are associated (or correlated) with Hrcules SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrcules SA has no effect on the direction of Fras Le i.e., Fras Le and Hrcules SA go up and down completely randomly.
Pair Corralation between Fras Le and Hrcules SA
Assuming the 90 days trading horizon Fras le SA is expected to generate 0.35 times more return on investment than Hrcules SA. However, Fras le SA is 2.85 times less risky than Hrcules SA. It trades about 0.09 of its potential returns per unit of risk. Hrcules SA is currently generating about 0.03 per unit of risk. If you would invest 1,542 in Fras le SA on August 27, 2024 and sell it today you would earn a total of 523.00 from holding Fras le SA or generate 33.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Fras le SA vs. Hrcules SA
Performance |
Timeline |
Fras le SA |
Hrcules SA |
Fras Le and Hrcules SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fras Le and Hrcules SA
The main advantage of trading using opposite Fras Le and Hrcules SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le position performs unexpectedly, Hrcules 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 Hrcules SA will offset losses from the drop in Hrcules SA's long position.Fras Le vs. Baidu Inc | Fras Le vs. Deutsche Bank Aktiengesellschaft | Fras Le vs. HSBC Holdings plc | Fras Le vs. The Bank of |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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