Correlation Between Tower Investments and Saule Technologies
Can any of the company-specific risk be diversified away by investing in both Tower Investments and Saule Technologies 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 Saule Technologies 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 Saule Technologies SA, you can compare the effects of market volatilities on Tower Investments and Saule Technologies 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 Saule Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Investments and Saule Technologies.
Diversification Opportunities for Tower Investments and Saule Technologies
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tower and Saule is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tower Investments SA and Saule Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saule Technologies 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 Saule Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saule Technologies has no effect on the direction of Tower Investments i.e., Tower Investments and Saule Technologies go up and down completely randomly.
Pair Corralation between Tower Investments and Saule Technologies
Assuming the 90 days trading horizon Tower Investments SA is expected to generate 1.82 times more return on investment than Saule Technologies. However, Tower Investments is 1.82 times more volatile than Saule Technologies SA. It trades about -0.02 of its potential returns per unit of risk. Saule Technologies SA is currently generating about -0.06 per unit of risk. If you would invest 810.00 in Tower Investments SA on September 2, 2024 and sell it today you would lose (544.00) from holding Tower Investments SA or give up 67.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Tower Investments SA vs. Saule Technologies SA
Performance |
| Timeline |
| Tower Investments |
| Saule Technologies |
Tower Investments and Saule Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Investments and Saule Technologies
The main advantage of trading using opposite Tower Investments and Saule Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Investments position performs unexpectedly, Saule Technologies 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 Saule Technologies will offset losses from the drop in Saule Technologies' long position.| Tower Investments vs. BNP Paribas Bank | Tower Investments vs. Intersport Polska SA | Tower Investments vs. Marie Brizard Wine | Tower Investments vs. Saule Technologies SA |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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