Correlation Between Seed Innovations and European Metals
Can any of the company-specific risk be diversified away by investing in both Seed Innovations and European Metals 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 Seed Innovations and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seed Innovations and European Metals Holdings, you can compare the effects of market volatilities on Seed Innovations and European Metals 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 Seed Innovations with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seed Innovations and European Metals.
Diversification Opportunities for Seed Innovations and European Metals
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seed and European is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Seed Innovations and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Seed 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 Seed Innovations are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Seed Innovations i.e., Seed Innovations and European Metals go up and down completely randomly.
Pair Corralation between Seed Innovations and European Metals
Assuming the 90 days trading horizon Seed Innovations is expected to generate 0.99 times more return on investment than European Metals. However, Seed Innovations is 1.01 times less risky than European Metals. It trades about 0.02 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.07 per unit of risk. If you would invest 157.00 in Seed Innovations on September 24, 2024 and sell it today you would earn a total of 3.00 from holding Seed Innovations or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seed Innovations vs. European Metals Holdings
Performance |
| Timeline |
| Seed Innovations |
| European Metals Holdings |
Seed Innovations and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seed Innovations and European Metals
The main advantage of trading using opposite Seed Innovations and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seed Innovations position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Seed Innovations vs. Prudential Financial | Seed Innovations vs. Sparebank 1 SR | Seed Innovations vs. Arrow Electronics | Seed Innovations vs. Regions Financial Corp |
| European Metals vs. Fresenius Medical Care | European Metals vs. Oakley Capital Investments | European Metals vs. New Residential Investment | European Metals vs. Compal Electronics GDR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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