Correlation Between Speciality Restaurants and Industrial Investment
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By analyzing existing cross correlation between Speciality Restaurants Limited and Industrial Investment Trust, you can compare the effects of market volatilities on Speciality Restaurants and Industrial Investment 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 Speciality Restaurants with a short position of Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Speciality Restaurants and Industrial Investment.
Diversification Opportunities for Speciality Restaurants and Industrial Investment
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Speciality and Industrial is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Speciality Restaurants Limited and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and Speciality Restaurants 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 Speciality Restaurants Limited are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Speciality Restaurants i.e., Speciality Restaurants and Industrial Investment go up and down completely randomly.
Pair Corralation between Speciality Restaurants and Industrial Investment
Assuming the 90 days trading horizon Speciality Restaurants Limited is expected to under-perform the Industrial Investment. But the stock apears to be less risky and, when comparing its historical volatility, Speciality Restaurants Limited is 1.25 times less risky than Industrial Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Industrial Investment Trust is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 15,870 in Industrial Investment Trust on September 1, 2024 and sell it today you would earn a total of 24,810 from holding Industrial Investment Trust or generate 156.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Speciality Restaurants Limited vs. Industrial Investment Trust
Performance |
| Timeline |
| Speciality Restaurants |
| Industrial Investment |
Speciality Restaurants and Industrial Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Speciality Restaurants and Industrial Investment
The main advantage of trading using opposite Speciality Restaurants and Industrial Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Speciality Restaurants position performs unexpectedly, Industrial Investment 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 Industrial Investment will offset losses from the drop in Industrial Investment's long position.The idea behind Speciality Restaurants Limited and Industrial Investment Trust 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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