Correlation Between Tower Investments and Comp SA
Can any of the company-specific risk be diversified away by investing in both Tower Investments and Comp 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 Tower Investments and Comp SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Investments SA and Comp SA, you can compare the effects of market volatilities on Tower Investments and Comp 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 Tower Investments with a short position of Comp SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Investments and Comp SA.
Diversification Opportunities for Tower Investments and Comp SA
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tower and Comp is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tower Investments SA and Comp SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comp SA and Tower 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 Tower Investments SA are associated (or correlated) with Comp SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comp SA has no effect on the direction of Tower Investments i.e., Tower Investments and Comp SA go up and down completely randomly.
Pair Corralation between Tower Investments and Comp SA
Assuming the 90 days trading horizon Tower Investments SA is expected to generate 5.33 times more return on investment than Comp SA. However, Tower Investments is 5.33 times more volatile than Comp SA. It trades about 0.04 of its potential returns per unit of risk. Comp SA is currently generating about 0.07 per unit of risk. If you would invest 262.00 in Tower Investments SA on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Tower Investments SA or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Tower Investments SA vs. Comp SA
Performance |
| Timeline |
| Tower Investments |
| Comp SA |
Tower Investments and Comp SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Investments and Comp SA
The main advantage of trading using opposite Tower Investments and Comp SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Investments position performs unexpectedly, Comp 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 Comp SA will offset losses from the drop in Comp SA's long position.| Tower Investments vs. Asseco Business Solutions | Tower Investments vs. Detalion Games SA | Tower Investments vs. Asseco South Eastern | Tower Investments vs. CFI Holding SA |
| Comp SA vs. Asseco Business Solutions | Comp SA vs. Detalion Games SA | Comp SA vs. Asseco South Eastern | Comp SA vs. CFI Holding SA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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