Correlation Between Indutrade and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Indutrade and Superior Plus 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 Indutrade and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Superior Plus Corp, you can compare the effects of market volatilities on Indutrade and Superior Plus 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 Indutrade with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Superior Plus.
Diversification Opportunities for Indutrade and Superior Plus
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Indutrade and Superior is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Indutrade 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 Indutrade AB are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Indutrade i.e., Indutrade and Superior Plus go up and down completely randomly.
Pair Corralation between Indutrade and Superior Plus
Assuming the 90 days horizon Indutrade AB is expected to under-perform the Superior Plus. But the stock apears to be less risky and, when comparing its historical volatility, Indutrade AB is 3.21 times less risky than Superior Plus. The stock trades about -0.13 of its potential returns per unit of risk. The Superior Plus Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 414.00 in Superior Plus Corp on August 30, 2024 and sell it today you would lose (4.00) from holding Superior Plus Corp or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. Superior Plus Corp
Performance |
| Timeline |
| Indutrade AB |
| Superior Plus Corp |
Indutrade and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Superior Plus
The main advantage of trading using opposite Indutrade and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Indutrade vs. PARKEN Sport Entertainment | Indutrade vs. TRADEGATE | Indutrade vs. CARSALESCOM | Indutrade vs. Vastned Retail NV |
| Superior Plus vs. Meli Hotels International | Superior Plus vs. InterContinental Hotels Group | Superior Plus vs. PT Bank Maybank | Superior Plus vs. Pebblebrook Hotel Trust |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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