Correlation Between SERI INDUSTRIAL and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL and AUTO TRADER 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 SERI INDUSTRIAL and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and AUTO TRADER ADR, you can compare the effects of market volatilities on SERI INDUSTRIAL and AUTO TRADER 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 SERI INDUSTRIAL with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and AUTO TRADER.
Diversification Opportunities for SERI INDUSTRIAL and AUTO TRADER
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between SERI and AUTO is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and AUTO TRADER go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and AUTO TRADER
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the AUTO TRADER. In addition to that, SERI INDUSTRIAL is 2.65 times more volatile than AUTO TRADER ADR. It trades about -0.06 of its total potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.05 per unit of volatility. If you would invest 228.00 in AUTO TRADER ADR on September 3, 2024 and sell it today you would earn a total of 20.00 from holding AUTO TRADER ADR or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. AUTO TRADER ADR
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| AUTO TRADER ADR |
SERI INDUSTRIAL and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and AUTO TRADER
The main advantage of trading using opposite SERI INDUSTRIAL and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| AUTO TRADER vs. Alphabet Class A | AUTO TRADER vs. Meta Platforms | AUTO TRADER vs. Meta Platforms | AUTO TRADER vs. Tencent Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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