Correlation Between TREECOM and H FARM
Can any of the company-specific risk be diversified away by investing in both TREECOM and H FARM 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 TREECOM and H FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TREECOM and H FARM SPA, you can compare the effects of market volatilities on TREECOM and H FARM 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 TREECOM with a short position of H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of TREECOM and H FARM.
Diversification Opportunities for TREECOM and H FARM
Poor diversification
The 3 months correlation between TREECOM and 5JQ is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TREECOM and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA and TREECOM 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 TREECOM are associated (or correlated) with H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of TREECOM i.e., TREECOM and H FARM go up and down completely randomly.
Pair Corralation between TREECOM and H FARM
Assuming the 90 days trading horizon TREECOM is expected to generate 0.88 times more return on investment than H FARM. However, TREECOM is 1.14 times less risky than H FARM. It trades about 0.09 of its potential returns per unit of risk. H FARM SPA is currently generating about 0.01 per unit of risk. If you would invest 1,510 in TREECOM on September 14, 2024 and sell it today you would earn a total of 2,379 from holding TREECOM or generate 157.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
TREECOM vs. H FARM SPA
Performance |
| Timeline |
| TREECOM |
| H FARM SPA |
TREECOM and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TREECOM and H FARM
The main advantage of trading using opposite TREECOM and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TREECOM position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| TREECOM vs. H FARM SPA | TREECOM vs. PLAYSTUDIOS A DL 0001 | TREECOM vs. Tencent Music Entertainment | TREECOM vs. ZINC MEDIA GR |
| H FARM vs. Ameriprise Financial | H FARM vs. Ares Management Corp | H FARM vs. Superior Plus Corp | H FARM vs. SIVERS SEMICONDUCTORS AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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