Correlation Between Sabio Holdings and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Sabio Holdings 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 Sabio Holdings and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabio Holdings and Auto Trader Group, you can compare the effects of market volatilities on Sabio Holdings 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 Sabio Holdings with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabio Holdings and Auto Trader.
Diversification Opportunities for Sabio Holdings and Auto Trader
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sabio and Auto is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and Sabio Holdings 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 Sabio Holdings 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 Group has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Auto Trader go up and down completely randomly.
Pair Corralation between Sabio Holdings and Auto Trader
Assuming the 90 days horizon Sabio Holdings is expected to generate 4.34 times more return on investment than Auto Trader. However, Sabio Holdings is 4.34 times more volatile than Auto Trader Group. It trades about 0.01 of its potential returns per unit of risk. Auto Trader Group is currently generating about -0.22 per unit of risk. If you would invest 37.00 in Sabio Holdings on October 26, 2024 and sell it today you would lose (2.00) from holding Sabio Holdings or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.16% |
| Values | Daily Returns |
Sabio Holdings vs. Auto Trader Group
Performance |
| Timeline |
| Sabio Holdings |
| Auto Trader Group |
Sabio Holdings and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabio Holdings and Auto Trader
The main advantage of trading using opposite Sabio Holdings and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabio Holdings 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.| Sabio Holdings vs. Tinybeans Group Limited | Sabio Holdings vs. DGTL Holdings | Sabio Holdings vs. Zoomd Technologies | Sabio Holdings vs. Quizam Media |
| Auto Trader vs. Tinybeans Group Limited | Auto Trader vs. DGTL Holdings | Auto Trader vs. Sabio Holdings | Auto Trader vs. Zoomd Technologies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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