Correlation Between London Security and METALL ZUG
Can any of the company-specific risk be diversified away by investing in both London Security and METALL ZUG 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 London Security and METALL ZUG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and METALL ZUG AG, you can compare the effects of market volatilities on London Security and METALL ZUG 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 London Security with a short position of METALL ZUG. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and METALL ZUG.
Diversification Opportunities for London Security and METALL ZUG
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between London and METALL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and METALL ZUG AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METALL ZUG AG and London Security 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 London Security Plc are associated (or correlated) with METALL ZUG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METALL ZUG AG has no effect on the direction of London Security i.e., London Security and METALL ZUG go up and down completely randomly.
Pair Corralation between London Security and METALL ZUG
Assuming the 90 days trading horizon London Security Plc is expected to generate 0.95 times more return on investment than METALL ZUG. However, London Security Plc is 1.06 times less risky than METALL ZUG. It trades about 0.06 of its potential returns per unit of risk. METALL ZUG AG is currently generating about -0.1 per unit of risk. If you would invest 294,207 in London Security Plc on September 24, 2024 and sell it today you would earn a total of 45,793 from holding London Security Plc or generate 15.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.63% |
| Values | Daily Returns |
London Security Plc vs. METALL ZUG AG
Performance |
| Timeline |
| London Security Plc |
| METALL ZUG AG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
London Security and METALL ZUG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and METALL ZUG
The main advantage of trading using opposite London Security and METALL ZUG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, METALL ZUG 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 METALL ZUG will offset losses from the drop in METALL ZUG's long position.| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
| METALL ZUG vs. Uniper SE | METALL ZUG vs. Mulberry Group PLC | METALL ZUG vs. London Security Plc | METALL ZUG vs. Triad Group PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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