Correlation Between Jeudan and Cemat AS
Can any of the company-specific risk be diversified away by investing in both Jeudan and Cemat AS 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 Jeudan and Cemat AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeudan and Cemat AS, you can compare the effects of market volatilities on Jeudan and Cemat AS 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 Jeudan with a short position of Cemat AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeudan and Cemat AS.
Diversification Opportunities for Jeudan and Cemat AS
Poor diversification
The 3 months correlation between Jeudan and Cemat is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Jeudan and Cemat AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemat AS and Jeudan 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 Jeudan are associated (or correlated) with Cemat AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemat AS has no effect on the direction of Jeudan i.e., Jeudan and Cemat AS go up and down completely randomly.
Pair Corralation between Jeudan and Cemat AS
Assuming the 90 days trading horizon Jeudan is expected to generate 7.34 times less return on investment than Cemat AS. But when comparing it to its historical volatility, Jeudan is 1.2 times less risky than Cemat AS. It trades about 0.01 of its potential returns per unit of risk. Cemat AS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 97.00 in Cemat AS on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Cemat AS or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Jeudan vs. Cemat AS
Performance |
| Timeline |
| Jeudan |
| Cemat AS |
Jeudan and Cemat AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeudan and Cemat AS
The main advantage of trading using opposite Jeudan and Cemat AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeudan position performs unexpectedly, Cemat AS 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 Cemat AS will offset losses from the drop in Cemat AS's long position.The idea behind Jeudan and Cemat AS 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.| Cemat AS vs. BioPorto | Cemat AS vs. Newcap Holding AS | Cemat AS vs. Agat Ejendomme AS | Cemat AS vs. PF Atlantic Petroleum |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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