Correlation Between Monks Investment and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Aeorema Communications 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 Monks Investment and Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monks Investment Trust and Aeorema Communications Plc, you can compare the effects of market volatilities on Monks Investment and Aeorema Communications 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 Monks Investment with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Aeorema Communications.
Diversification Opportunities for Monks Investment and Aeorema Communications
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monks and Aeorema is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and Monks Investment 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 Monks Investment Trust are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of Monks Investment i.e., Monks Investment and Aeorema Communications go up and down completely randomly.
Pair Corralation between Monks Investment and Aeorema Communications
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.65 times more return on investment than Aeorema Communications. However, Monks Investment Trust is 1.54 times less risky than Aeorema Communications. It trades about 0.38 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about 0.13 per unit of risk. If you would invest 118,400 in Monks Investment Trust on September 5, 2024 and sell it today you would earn a total of 9,400 from holding Monks Investment Trust or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monks Investment Trust vs. Aeorema Communications Plc
Performance |
| Timeline |
| Monks Investment Trust |
| Aeorema Communications |
Monks Investment and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Aeorema Communications
The main advantage of trading using opposite Monks Investment and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| Monks Investment vs. Aeorema Communications Plc | Monks Investment vs. Cornish Metals | Monks Investment vs. Panther Metals PLC | Monks Investment vs. Verizon Communications |
| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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