Correlation Between Ceconomy and Tandy Leather
Can any of the company-specific risk be diversified away by investing in both Ceconomy and Tandy Leather 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 Ceconomy and Tandy Leather into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceconomy AG ADR and Tandy Leather Factory, you can compare the effects of market volatilities on Ceconomy and Tandy Leather 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 Ceconomy with a short position of Tandy Leather. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceconomy and Tandy Leather.
Diversification Opportunities for Ceconomy and Tandy Leather
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ceconomy and Tandy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ceconomy AG ADR and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory and Ceconomy 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 Ceconomy AG ADR are associated (or correlated) with Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of Ceconomy i.e., Ceconomy and Tandy Leather go up and down completely randomly.
Pair Corralation between Ceconomy and Tandy Leather
Assuming the 90 days horizon Ceconomy AG ADR is expected to generate 2.61 times more return on investment than Tandy Leather. However, Ceconomy is 2.61 times more volatile than Tandy Leather Factory. It trades about 0.04 of its potential returns per unit of risk. Tandy Leather Factory is currently generating about -0.12 per unit of risk. If you would invest 58.00 in Ceconomy AG ADR on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Ceconomy AG ADR or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ceconomy AG ADR vs. Tandy Leather Factory
Performance |
| Timeline |
| Ceconomy AG ADR |
| Tandy Leather Factory |
Ceconomy and Tandy Leather Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceconomy and Tandy Leather
The main advantage of trading using opposite Ceconomy and Tandy Leather positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceconomy position performs unexpectedly, Tandy Leather 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 Tandy Leather will offset losses from the drop in Tandy Leather's long position.| Ceconomy vs. Green River Gold | Ceconomy vs. Dixons Carphone plc | Ceconomy vs. Tandy Leather Factory | Ceconomy vs. Card Factory plc |
| Tandy Leather vs. Green River Gold | Tandy Leather vs. Dixons Carphone plc | Tandy Leather vs. Ceconomy AG ADR | Tandy Leather vs. Winmark |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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