Correlation Between Safetech Innovations and Aerostar Bacau
Can any of the company-specific risk be diversified away by investing in both Safetech Innovations and Aerostar Bacau 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 Safetech Innovations and Aerostar Bacau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safetech Innovations SA and Aerostar Bacau, you can compare the effects of market volatilities on Safetech Innovations and Aerostar Bacau 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 Safetech Innovations with a short position of Aerostar Bacau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safetech Innovations and Aerostar Bacau.
Diversification Opportunities for Safetech Innovations and Aerostar Bacau
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Safetech and Aerostar is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Safetech Innovations SA and Aerostar Bacau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerostar Bacau and Safetech Innovations 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 Safetech Innovations SA are associated (or correlated) with Aerostar Bacau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerostar Bacau has no effect on the direction of Safetech Innovations i.e., Safetech Innovations and Aerostar Bacau go up and down completely randomly.
Pair Corralation between Safetech Innovations and Aerostar Bacau
Assuming the 90 days trading horizon Safetech Innovations SA is expected to under-perform the Aerostar Bacau. But the stock apears to be less risky and, when comparing its historical volatility, Safetech Innovations SA is 1.46 times less risky than Aerostar Bacau. The stock trades about -0.04 of its potential returns per unit of risk. The Aerostar Bacau is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 780.00 in Aerostar Bacau on September 2, 2024 and sell it today you would earn a total of 92.00 from holding Aerostar Bacau or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.46% |
| Values | Daily Returns |
Safetech Innovations SA vs. Aerostar Bacau
Performance |
| Timeline |
| Safetech Innovations |
| Aerostar Bacau |
Safetech Innovations and Aerostar Bacau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safetech Innovations and Aerostar Bacau
The main advantage of trading using opposite Safetech Innovations and Aerostar Bacau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safetech Innovations position performs unexpectedly, Aerostar Bacau 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 Aerostar Bacau will offset losses from the drop in Aerostar Bacau's long position.| Safetech Innovations vs. Patria Bank SA | Safetech Innovations vs. Biofarm Bucure | Safetech Innovations vs. Digi Communications NV | Safetech Innovations vs. AROBS TRANSILVANIA SOFTWARE |
| Aerostar Bacau vs. AROBS TRANSILVANIA SOFTWARE | Aerostar Bacau vs. Erste Group Bank | Aerostar Bacau vs. Safetech Innovations SA | Aerostar Bacau vs. TRANSILVANIA INVESTMENTS ALLIANCE |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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