Correlation Between GN Store and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both GN Store and PARKEN Sport 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 GN Store and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GN Store Nord and PARKEN Sport Entertainment, you can compare the effects of market volatilities on GN Store and PARKEN Sport 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 GN Store with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of GN Store and PARKEN Sport.
Diversification Opportunities for GN Store and PARKEN Sport
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GN Store and PARKEN is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and GN Store 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 GN Store Nord are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of GN Store i.e., GN Store and PARKEN Sport go up and down completely randomly.
Pair Corralation between GN Store and PARKEN Sport
Assuming the 90 days horizon GN Store Nord is expected to under-perform the PARKEN Sport. In addition to that, GN Store is 1.78 times more volatile than PARKEN Sport Entertainment. It trades about -0.06 of its total potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.05 per unit of volatility. If you would invest 12,450 in PARKEN Sport Entertainment on September 12, 2024 and sell it today you would earn a total of 150.00 from holding PARKEN Sport Entertainment or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GN Store Nord vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| GN Store Nord |
| PARKEN Sport Enterta |
GN Store and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GN Store and PARKEN Sport
The main advantage of trading using opposite GN Store and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GN Store position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.The idea behind GN Store Nord and PARKEN Sport Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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