Correlation Between PARKEN Sport and Erria AS
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport and Erria AS 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 PARKEN Sport and Erria AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and Erria AS, you can compare the effects of market volatilities on PARKEN Sport and Erria AS 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 PARKEN Sport with a short position of Erria AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and Erria AS.
Diversification Opportunities for PARKEN Sport and Erria AS
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PARKEN and Erria is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Erria AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erria AS and PARKEN Sport 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 PARKEN Sport Entertainment are associated (or correlated) with Erria AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erria AS has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and Erria AS go up and down completely randomly.
Pair Corralation between PARKEN Sport and Erria AS
Assuming the 90 days trading horizon PARKEN Sport is expected to generate 1.93 times less return on investment than Erria AS. But when comparing it to its historical volatility, PARKEN Sport Entertainment is 2.23 times less risky than Erria AS. It trades about 0.16 of its potential returns per unit of risk. Erria AS is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 304.00 in Erria AS on October 25, 2024 and sell it today you would earn a total of 42.00 from holding Erria AS or generate 13.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. Erria AS
Performance |
| Timeline |
| PARKEN Sport Enterta |
| Erria AS |
PARKEN Sport and Erria AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and Erria AS
The main advantage of trading using opposite PARKEN Sport and Erria AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport position performs unexpectedly, Erria AS 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 Erria AS will offset losses from the drop in Erria AS's long position.| PARKEN Sport vs. Broendbyernes IF Fodbold | PARKEN Sport vs. Bang Olufsen | PARKEN Sport vs. Matas AS | PARKEN Sport vs. NKT AS |
| Erria AS vs. PARKEN Sport Entertainment | Erria AS vs. Fynske Bank AS | Erria AS vs. Prime Office AS | Erria AS vs. Scandinavian Tobacco Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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