Correlation Between Indutrade and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both Indutrade 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 Indutrade and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and PARKEN Sport Entertainment, you can compare the effects of market volatilities on Indutrade 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 Indutrade with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and PARKEN Sport.
Diversification Opportunities for Indutrade and PARKEN Sport
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indutrade and PARKEN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB 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 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 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 Indutrade i.e., Indutrade and PARKEN Sport go up and down completely randomly.
Pair Corralation between Indutrade and PARKEN Sport
Assuming the 90 days horizon Indutrade AB is expected to generate 1.52 times more return on investment than PARKEN Sport. However, Indutrade is 1.52 times more volatile than PARKEN Sport Entertainment. It trades about 0.29 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.02 per unit of risk. If you would invest 2,548 in Indutrade AB on November 27, 2024 and sell it today you would earn a total of 244.00 from holding Indutrade AB or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| Indutrade AB |
| PARKEN Sport Enterta |
Indutrade and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and PARKEN Sport
The main advantage of trading using opposite Indutrade and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade 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.| Indutrade vs. Hyster Yale Materials Handling | Indutrade vs. Applied Materials | Indutrade vs. Heidelberg Materials AG | Indutrade vs. Plastic Omnium |
| PARKEN Sport vs. Stewart Information Services | PARKEN Sport vs. ALERION CLEANPOWER | PARKEN Sport vs. NTT DATA | PARKEN Sport vs. Clean Harbors |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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