Correlation Between Latcore SA and Frey SA
Can any of the company-specific risk be diversified away by investing in both Latcore SA and Frey SA 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 Latcore SA and Frey SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Latcore SA and Frey SA, you can compare the effects of market volatilities on Latcore SA and Frey SA 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 Latcore SA with a short position of Frey SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latcore SA and Frey SA.
Diversification Opportunities for Latcore SA and Frey SA
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Latcore and Frey is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Latcore SA and Frey SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frey SA and Latcore SA 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 Latcore SA are associated (or correlated) with Frey SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frey SA has no effect on the direction of Latcore SA i.e., Latcore SA and Frey SA go up and down completely randomly.
Pair Corralation between Latcore SA and Frey SA
Assuming the 90 days trading horizon Latcore SA is expected to generate 3.93 times more return on investment than Frey SA. However, Latcore SA is 3.93 times more volatile than Frey SA. It trades about 0.13 of its potential returns per unit of risk. Frey SA is currently generating about -0.15 per unit of risk. If you would invest 0.70 in Latcore SA on August 27, 2024 and sell it today you would earn a total of 0.06 from holding Latcore SA or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Latcore SA vs. Frey SA
Performance |
| Timeline |
| Latcore SA |
| Frey SA |
Latcore SA and Frey SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latcore SA and Frey SA
The main advantage of trading using opposite Latcore SA and Frey SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latcore SA position performs unexpectedly, Frey SA 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 Frey SA will offset losses from the drop in Frey SA's long position.The idea behind Latcore SA and Frey SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |