Correlation Between TOTAL GABON and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and STORE ELECTRONIC 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 TOTAL GABON and STORE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and STORE ELECTRONIC, you can compare the effects of market volatilities on TOTAL GABON and STORE ELECTRONIC 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 TOTAL GABON with a short position of STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and STORE ELECTRONIC.
Diversification Opportunities for TOTAL GABON and STORE ELECTRONIC
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TOTAL and STORE is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC and TOTAL GABON 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 TOTAL GABON are associated (or correlated) with STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between TOTAL GABON and STORE ELECTRONIC
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 1.45 times less return on investment than STORE ELECTRONIC. But when comparing it to its historical volatility, TOTAL GABON is 2.82 times less risky than STORE ELECTRONIC. It trades about 0.06 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,990 in STORE ELECTRONIC on September 3, 2024 and sell it today you would earn a total of 1,030 from holding STORE ELECTRONIC or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. STORE ELECTRONIC
Performance |
| Timeline |
| TOTAL GABON |
| STORE ELECTRONIC |
TOTAL GABON and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and STORE ELECTRONIC
The main advantage of trading using opposite TOTAL GABON and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL ENERGY SERVS | TOTAL GABON vs. Anheuser Busch InBev SANV |
| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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