Correlation Between Schulz SA and Fras Le
Can any of the company-specific risk be diversified away by investing in both Schulz SA and Fras Le 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 Schulz SA and Fras Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schulz SA and Fras le SA, you can compare the effects of market volatilities on Schulz SA and Fras Le 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 Schulz SA with a short position of Fras Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schulz SA and Fras Le.
Diversification Opportunities for Schulz SA and Fras Le
Very good diversification
The 3 months correlation between Schulz and Fras is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Schulz SA and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA and Schulz SA 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 Schulz SA are associated (or correlated) with Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Schulz SA i.e., Schulz SA and Fras Le go up and down completely randomly.
Pair Corralation between Schulz SA and Fras Le
Assuming the 90 days trading horizon Schulz SA is expected to under-perform the Fras Le. But the preferred stock apears to be less risky and, when comparing its historical volatility, Schulz SA is 1.01 times less risky than Fras Le. The preferred stock trades about -0.24 of its potential returns per unit of risk. The Fras le SA is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 2,219 in Fras le SA on August 30, 2024 and sell it today you would lose (134.00) from holding Fras le SA or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schulz SA vs. Fras le SA
Performance |
| Timeline |
| Schulz SA |
| Fras le SA |
Schulz SA and Fras Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schulz SA and Fras Le
The main advantage of trading using opposite Schulz SA and Fras Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schulz SA position performs unexpectedly, Fras Le 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 Fras Le will offset losses from the drop in Fras Le's long position.The idea behind Schulz SA and Fras le SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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