Correlation Between Strategic Investments and Erria AS
Can any of the company-specific risk be diversified away by investing in both Strategic Investments and Erria AS 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 Strategic Investments and Erria AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Investments AS and Erria AS, you can compare the effects of market volatilities on Strategic Investments and Erria AS 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 Strategic Investments with a short position of Erria AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Erria AS.
Diversification Opportunities for Strategic Investments and Erria AS
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Strategic and Erria is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and Erria AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erria AS and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with Erria AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erria AS has no effect on the direction of Strategic Investments i.e., Strategic Investments and Erria AS go up and down completely randomly.
Pair Corralation between Strategic Investments and Erria AS
Assuming the 90 days trading horizon Strategic Investments AS is expected to under-perform the Erria AS. In addition to that, Strategic Investments is 1.2 times more volatile than Erria AS. It trades about -0.06 of its total potential returns per unit of risk. Erria AS is currently generating about -0.06 per unit of volatility. If you would invest 340.00 in Erria AS on September 12, 2024 and sell it today you would lose (40.00) from holding Erria AS or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Investments AS vs. Erria AS
Performance |
| Timeline |
| Strategic Investments |
| Erria AS |
Strategic Investments and Erria AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Investments and Erria AS
The main advantage of trading using opposite Strategic Investments and Erria AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments position performs unexpectedly, Erria AS 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 Erria AS will offset losses from the drop in Erria AS's long position.The idea behind Strategic Investments AS and Erria AS 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.| Erria AS vs. PARKEN Sport Entertainment | Erria AS vs. Hvidbjerg Bank | Erria AS vs. Nordinvestments AS | Erria AS vs. North Media AS |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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