Correlation Between REC Silicon and Pyrum Innovations
Can any of the company-specific risk be diversified away by investing in both REC Silicon and Pyrum Innovations 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 REC Silicon and Pyrum Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REC Silicon ASA and Pyrum Innovations AG, you can compare the effects of market volatilities on REC Silicon and Pyrum Innovations 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 REC Silicon with a short position of Pyrum Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of REC Silicon and Pyrum Innovations.
Diversification Opportunities for REC Silicon and Pyrum Innovations
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between REC and Pyrum is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding REC Silicon ASA and Pyrum Innovations AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyrum Innovations and REC Silicon 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 REC Silicon ASA are associated (or correlated) with Pyrum Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyrum Innovations has no effect on the direction of REC Silicon i.e., REC Silicon and Pyrum Innovations go up and down completely randomly.
Pair Corralation between REC Silicon and Pyrum Innovations
Assuming the 90 days trading horizon REC Silicon ASA is expected to under-perform the Pyrum Innovations. In addition to that, REC Silicon is 3.51 times more volatile than Pyrum Innovations AG. It trades about -0.3 of its total potential returns per unit of risk. Pyrum Innovations AG is currently generating about -0.03 per unit of volatility. If you would invest 35,200 in Pyrum Innovations AG on September 1, 2024 and sell it today you would lose (700.00) from holding Pyrum Innovations AG or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REC Silicon ASA vs. Pyrum Innovations AG
Performance |
| Timeline |
| REC Silicon ASA |
| Pyrum Innovations |
REC Silicon and Pyrum Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REC Silicon and Pyrum Innovations
The main advantage of trading using opposite REC Silicon and Pyrum Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC Silicon position performs unexpectedly, Pyrum Innovations 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 Pyrum Innovations will offset losses from the drop in Pyrum Innovations' long position.| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor ASA |
| Pyrum Innovations vs. Aker Horizons AS | Pyrum Innovations vs. Aker Solutions ASA | Pyrum Innovations vs. REC Silicon ASA | Pyrum Innovations vs. Elkem ASA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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