Correlation Between Compagnie and AbL Diagnostics
Can any of the company-specific risk be diversified away by investing in both Compagnie and AbL Diagnostics 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 Compagnie and AbL Diagnostics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Chemins and AbL Diagnostics SA, you can compare the effects of market volatilities on Compagnie and AbL Diagnostics 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 Compagnie with a short position of AbL Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and AbL Diagnostics.
Diversification Opportunities for Compagnie and AbL Diagnostics
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compagnie and AbL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Chemins and AbL Diagnostics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbL Diagnostics SA and Compagnie 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 Compagnie de Chemins are associated (or correlated) with AbL Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbL Diagnostics SA has no effect on the direction of Compagnie i.e., Compagnie and AbL Diagnostics go up and down completely randomly.
Pair Corralation between Compagnie and AbL Diagnostics
Assuming the 90 days trading horizon Compagnie de Chemins is expected to generate 7.36 times more return on investment than AbL Diagnostics. However, Compagnie is 7.36 times more volatile than AbL Diagnostics SA. It trades about 0.19 of its potential returns per unit of risk. AbL Diagnostics SA is currently generating about -0.15 per unit of risk. If you would invest 75,000 in Compagnie de Chemins on August 30, 2024 and sell it today you would earn a total of 15,000 from holding Compagnie de Chemins or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Chemins vs. AbL Diagnostics SA
Performance |
| Timeline |
| Compagnie de Chemins |
| AbL Diagnostics SA |
Compagnie and AbL Diagnostics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and AbL Diagnostics
The main advantage of trading using opposite Compagnie and AbL Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, AbL Diagnostics 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 AbL Diagnostics will offset losses from the drop in AbL Diagnostics' long position.| Compagnie vs. Metalliance SA | Compagnie vs. CMG Cleantech SA | Compagnie vs. Les Hotels Bav | Compagnie vs. Impulse Fitness Solutions |
| AbL Diagnostics vs. Axway Software | AbL Diagnostics vs. Reworld Media | AbL Diagnostics vs. Novatech Industries SA | AbL Diagnostics vs. Metalliance SA |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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