Correlation Between TRADEGATE and Alumil Aluminium
Can any of the company-specific risk be diversified away by investing in both TRADEGATE and Alumil Aluminium 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 TRADEGATE and Alumil Aluminium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and Alumil Aluminium Industry, you can compare the effects of market volatilities on TRADEGATE and Alumil Aluminium 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 TRADEGATE with a short position of Alumil Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and Alumil Aluminium.
Diversification Opportunities for TRADEGATE and Alumil Aluminium
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TRADEGATE and Alumil is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Alumil Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumil Aluminium Industry and TRADEGATE 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 TRADEGATE are associated (or correlated) with Alumil Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumil Aluminium Industry has no effect on the direction of TRADEGATE i.e., TRADEGATE and Alumil Aluminium go up and down completely randomly.
Pair Corralation between TRADEGATE and Alumil Aluminium
Assuming the 90 days trading horizon TRADEGATE is expected to generate 17.96 times less return on investment than Alumil Aluminium. But when comparing it to its historical volatility, TRADEGATE is 13.07 times less risky than Alumil Aluminium. It trades about 0.31 of its potential returns per unit of risk. Alumil Aluminium Industry is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 321.00 in Alumil Aluminium Industry on September 4, 2024 and sell it today you would earn a total of 69.00 from holding Alumil Aluminium Industry or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRADEGATE vs. Alumil Aluminium Industry
Performance |
| Timeline |
| TRADEGATE |
| Alumil Aluminium Industry |
TRADEGATE and Alumil Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and Alumil Aluminium
The main advantage of trading using opposite TRADEGATE and Alumil Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE position performs unexpectedly, Alumil Aluminium 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 Alumil Aluminium will offset losses from the drop in Alumil Aluminium's long position.The idea behind TRADEGATE and Alumil Aluminium Industry 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.| Alumil Aluminium vs. Wyndham Hotels Resorts | Alumil Aluminium vs. Sunstone Hotel Investors | Alumil Aluminium vs. COLUMBIA SPORTSWEAR | Alumil Aluminium vs. MELIA HOTELS |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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