Correlation Between KAROON GAS and TOTAL GABON
Can any of the company-specific risk be diversified away by investing in both KAROON GAS and TOTAL GABON 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 KAROON GAS and TOTAL GABON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAROON GAS AUST and TOTAL GABON, you can compare the effects of market volatilities on KAROON GAS and TOTAL GABON 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 KAROON GAS with a short position of TOTAL GABON. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAROON GAS and TOTAL GABON.
Diversification Opportunities for KAROON GAS and TOTAL GABON
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KAROON and TOTAL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding KAROON GAS AUST and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON and KAROON GAS 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 KAROON GAS AUST are associated (or correlated) with TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of KAROON GAS i.e., KAROON GAS and TOTAL GABON go up and down completely randomly.
Pair Corralation between KAROON GAS and TOTAL GABON
Assuming the 90 days trading horizon KAROON GAS AUST is expected to under-perform the TOTAL GABON. But the stock apears to be less risky and, when comparing its historical volatility, KAROON GAS AUST is 1.97 times less risky than TOTAL GABON. The stock trades about -0.02 of its potential returns per unit of risk. The TOTAL GABON is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 15,800 in TOTAL GABON on September 4, 2024 and sell it today you would earn a total of 2,550 from holding TOTAL GABON or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAROON GAS AUST vs. TOTAL GABON
Performance |
| Timeline |
| KAROON GAS AUST |
| TOTAL GABON |
KAROON GAS and TOTAL GABON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAROON GAS and TOTAL GABON
The main advantage of trading using opposite KAROON GAS and TOTAL GABON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAROON GAS position performs unexpectedly, TOTAL GABON 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 TOTAL GABON will offset losses from the drop in TOTAL GABON's long position.| KAROON GAS vs. ADRIATIC METALS LS 013355 | KAROON GAS vs. Selective Insurance Group | KAROON GAS vs. QBE Insurance Group | KAROON GAS vs. Goosehead Insurance |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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