Correlation Between Lords Grp and Central Asia
Can any of the company-specific risk be diversified away by investing in both Lords Grp and Central Asia 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 Lords Grp and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lords Grp Trading and Central Asia Metals, you can compare the effects of market volatilities on Lords Grp and Central Asia 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 Lords Grp with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lords Grp and Central Asia.
Diversification Opportunities for Lords Grp and Central Asia
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lords and Central is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lords Grp Trading and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and Lords Grp 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 Lords Grp Trading are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of Lords Grp i.e., Lords Grp and Central Asia go up and down completely randomly.
Pair Corralation between Lords Grp and Central Asia
Assuming the 90 days trading horizon Lords Grp Trading is expected to under-perform the Central Asia. In addition to that, Lords Grp is 1.22 times more volatile than Central Asia Metals. It trades about -0.08 of its total potential returns per unit of risk. Central Asia Metals is currently generating about -0.07 per unit of volatility. If you would invest 20,012 in Central Asia Metals on September 3, 2024 and sell it today you would lose (3,572) from holding Central Asia Metals or give up 17.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lords Grp Trading vs. Central Asia Metals
Performance |
| Timeline |
| Lords Grp Trading |
| Central Asia Metals |
Lords Grp and Central Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lords Grp and Central Asia
The main advantage of trading using opposite Lords Grp and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lords Grp position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.| Lords Grp vs. Zoom Video Communications | Lords Grp vs. JD Sports Fashion | Lords Grp vs. X FAB Silicon Foundries | Lords Grp vs. Ecofin Global Utilities |
| Central Asia vs. The Investment | Central Asia vs. Erste Group Bank | Central Asia vs. Alior Bank SA | Central Asia vs. Herald Investment Trust |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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