Correlation Between International Agricultural and Sidi Kerir
Can any of the company-specific risk be diversified away by investing in both International Agricultural and Sidi Kerir 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 International Agricultural and Sidi Kerir into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Agricultural Products and Sidi Kerir Petrochemicals, you can compare the effects of market volatilities on International Agricultural and Sidi Kerir 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 International Agricultural with a short position of Sidi Kerir. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Agricultural and Sidi Kerir.
Diversification Opportunities for International Agricultural and Sidi Kerir
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and Sidi is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding International Agricultural Pro and Sidi Kerir Petrochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidi Kerir Petrochemicals and International Agricultural 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 International Agricultural Products are associated (or correlated) with Sidi Kerir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidi Kerir Petrochemicals has no effect on the direction of International Agricultural i.e., International Agricultural and Sidi Kerir go up and down completely randomly.
Pair Corralation between International Agricultural and Sidi Kerir
Assuming the 90 days trading horizon International Agricultural Products is expected to generate 1.41 times more return on investment than Sidi Kerir. However, International Agricultural is 1.41 times more volatile than Sidi Kerir Petrochemicals. It trades about 0.08 of its potential returns per unit of risk. Sidi Kerir Petrochemicals is currently generating about 0.01 per unit of risk. If you would invest 853.00 in International Agricultural Products on August 31, 2024 and sell it today you would earn a total of 1,069 from holding International Agricultural Products or generate 125.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Agricultural Pro vs. Sidi Kerir Petrochemicals
Performance |
| Timeline |
| International Agricultural |
| Sidi Kerir Petrochemicals |
International Agricultural and Sidi Kerir Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Agricultural and Sidi Kerir
The main advantage of trading using opposite International Agricultural and Sidi Kerir positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Agricultural position performs unexpectedly, Sidi Kerir 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 Sidi Kerir will offset losses from the drop in Sidi Kerir's long position.The idea behind International Agricultural Products and Sidi Kerir Petrochemicals 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.
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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