Correlation Between London Security and SURETRACK MON
Can any of the company-specific risk be diversified away by investing in both London Security and SURETRACK MON 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 SURETRACK MON 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 SURETRACK MON , you can compare the effects of market volatilities on London Security and SURETRACK MON 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 SURETRACK MON. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and SURETRACK MON.
Diversification Opportunities for London Security and SURETRACK MON
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between London and SURETRACK is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and SURETRACK MON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SURETRACK MON 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 SURETRACK MON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SURETRACK MON has no effect on the direction of London Security i.e., London Security and SURETRACK MON go up and down completely randomly.
Pair Corralation between London Security and SURETRACK MON
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the SURETRACK MON. But the stock apears to be less risky and, when comparing its historical volatility, London Security Plc is 7.51 times less risky than SURETRACK MON. The stock trades about -0.19 of its potential returns per unit of risk. The SURETRACK MON is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 18.00 in SURETRACK MON on August 30, 2024 and sell it today you would earn a total of 22.00 from holding SURETRACK MON or generate 122.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. SURETRACK MON
Performance |
| Timeline |
| London Security Plc |
| SURETRACK MON |
London Security and SURETRACK MON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and SURETRACK MON
The main advantage of trading using opposite London Security and SURETRACK MON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, SURETRACK MON 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 SURETRACK MON will offset losses from the drop in SURETRACK MON's long position.| London Security vs. Aberdeen Diversified Income | London Security vs. Molson Coors Beverage | London Security vs. Fevertree Drinks Plc | London Security vs. Gamma Communications PLC |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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