Correlation Between SOFTWARE MANSION and Ferro SA
Can any of the company-specific risk be diversified away by investing in both SOFTWARE MANSION and Ferro SA 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 SOFTWARE MANSION and Ferro SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFTWARE MANSION SPOLKA and Ferro SA, you can compare the effects of market volatilities on SOFTWARE MANSION and Ferro SA 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 SOFTWARE MANSION with a short position of Ferro SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFTWARE MANSION and Ferro SA.
Diversification Opportunities for SOFTWARE MANSION and Ferro SA
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SOFTWARE and Ferro is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Ferro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferro SA and SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA are associated (or correlated) with Ferro SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferro SA has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Ferro SA go up and down completely randomly.
Pair Corralation between SOFTWARE MANSION and Ferro SA
Assuming the 90 days trading horizon SOFTWARE MANSION is expected to generate 1.19 times less return on investment than Ferro SA. In addition to that, SOFTWARE MANSION is 1.98 times more volatile than Ferro SA. It trades about 0.03 of its total potential returns per unit of risk. Ferro SA is currently generating about 0.06 per unit of volatility. If you would invest 1,983 in Ferro SA on September 5, 2024 and sell it today you would earn a total of 1,467 from holding Ferro SA or generate 73.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 51.52% |
| Values | Daily Returns |
SOFTWARE MANSION SPOLKA vs. Ferro SA
Performance |
| Timeline |
| SOFTWARE MANSION SPOLKA |
| Ferro SA |
SOFTWARE MANSION and Ferro SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFTWARE MANSION and Ferro SA
The main advantage of trading using opposite SOFTWARE MANSION and Ferro SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFTWARE MANSION position performs unexpectedly, Ferro SA 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 Ferro SA will offset losses from the drop in Ferro SA's long position.| SOFTWARE MANSION vs. BNP Paribas Bank | SOFTWARE MANSION vs. mBank SA | SOFTWARE MANSION vs. Kool2play SA | SOFTWARE MANSION vs. Mercator Medical SA |
| Ferro SA vs. Quantum Software SA | Ferro SA vs. mBank SA | Ferro SA vs. Bank Millennium SA | Ferro SA vs. SOFTWARE MANSION SPOLKA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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