Correlation Between Paramount Communications and Aban Offshore
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By analyzing existing cross correlation between Paramount Communications Limited and Aban Offshore Limited, you can compare the effects of market volatilities on Paramount Communications and Aban Offshore 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 Paramount Communications with a short position of Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Communications and Aban Offshore.
Diversification Opportunities for Paramount Communications and Aban Offshore
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Paramount and Aban is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and Paramount Communications 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 Paramount Communications Limited are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Paramount Communications i.e., Paramount Communications and Aban Offshore go up and down completely randomly.
Pair Corralation between Paramount Communications and Aban Offshore
Assuming the 90 days trading horizon Paramount Communications Limited is expected to generate 1.2 times more return on investment than Aban Offshore. However, Paramount Communications is 1.2 times more volatile than Aban Offshore Limited. It trades about -0.16 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about -0.36 per unit of risk. If you would invest 8,322 in Paramount Communications Limited on October 17, 2024 and sell it today you would lose (845.00) from holding Paramount Communications Limited or give up 10.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Communications Limit vs. Aban Offshore Limited
Performance |
| Timeline |
| Paramount Communications |
| Aban Offshore Limited |
Paramount Communications and Aban Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Communications and Aban Offshore
The main advantage of trading using opposite Paramount Communications and Aban Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Communications position performs unexpectedly, Aban Offshore 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 Aban Offshore will offset losses from the drop in Aban Offshore's long position.The idea behind Paramount Communications Limited and Aban Offshore Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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