Correlation Between Motor Oil and Euroconsultants
Can any of the company-specific risk be diversified away by investing in both Motor Oil and Euroconsultants 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 Motor Oil and Euroconsultants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motor Oil Corinth and Euroconsultants SA, you can compare the effects of market volatilities on Motor Oil and Euroconsultants 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 Motor Oil with a short position of Euroconsultants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motor Oil and Euroconsultants.
Diversification Opportunities for Motor Oil and Euroconsultants
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Motor and Euroconsultants is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Motor Oil Corinth and Euroconsultants SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroconsultants SA and Motor Oil 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 Motor Oil Corinth are associated (or correlated) with Euroconsultants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroconsultants SA has no effect on the direction of Motor Oil i.e., Motor Oil and Euroconsultants go up and down completely randomly.
Pair Corralation between Motor Oil and Euroconsultants
Assuming the 90 days trading horizon Motor Oil Corinth is expected to generate 0.55 times more return on investment than Euroconsultants. However, Motor Oil Corinth is 1.82 times less risky than Euroconsultants. It trades about 0.07 of its potential returns per unit of risk. Euroconsultants SA is currently generating about -0.03 per unit of risk. If you would invest 1,935 in Motor Oil Corinth on August 31, 2024 and sell it today you would earn a total of 28.00 from holding Motor Oil Corinth or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Motor Oil Corinth vs. Euroconsultants SA
Performance |
| Timeline |
| Motor Oil Corinth |
| Euroconsultants SA |
Motor Oil and Euroconsultants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motor Oil and Euroconsultants
The main advantage of trading using opposite Motor Oil and Euroconsultants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motor Oil position performs unexpectedly, Euroconsultants 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 Euroconsultants will offset losses from the drop in Euroconsultants' long position.| Motor Oil vs. Mytilineos SA | Motor Oil vs. Hellenic Petroleum SA | Motor Oil vs. Greek Organization of | Motor Oil vs. Hellenic Telecommunications Organization |
| Euroconsultants vs. Quest Holdings SA | Euroconsultants vs. CPI Computer Peripherals | Euroconsultants vs. National Bank of | Euroconsultants vs. EL D Mouzakis |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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