Correlation Between Teraplast Bist and Compa Sibiu
Can any of the company-specific risk be diversified away by investing in both Teraplast Bist and Compa Sibiu 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 Teraplast Bist and Compa Sibiu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teraplast Bist and Compa Sibiu, you can compare the effects of market volatilities on Teraplast Bist and Compa Sibiu 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 Teraplast Bist with a short position of Compa Sibiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teraplast Bist and Compa Sibiu.
Diversification Opportunities for Teraplast Bist and Compa Sibiu
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teraplast and Compa is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Teraplast Bist and Compa Sibiu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compa Sibiu and Teraplast Bist 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 Teraplast Bist are associated (or correlated) with Compa Sibiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compa Sibiu has no effect on the direction of Teraplast Bist i.e., Teraplast Bist and Compa Sibiu go up and down completely randomly.
Pair Corralation between Teraplast Bist and Compa Sibiu
Assuming the 90 days trading horizon Teraplast Bist is expected to under-perform the Compa Sibiu. In addition to that, Teraplast Bist is 1.25 times more volatile than Compa Sibiu. It trades about -0.16 of its total potential returns per unit of risk. Compa Sibiu is currently generating about -0.17 per unit of volatility. If you would invest 55.00 in Compa Sibiu on August 28, 2024 and sell it today you would lose (3.00) from holding Compa Sibiu or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teraplast Bist vs. Compa Sibiu
Performance |
| Timeline |
| Teraplast Bist |
| Compa Sibiu |
Teraplast Bist and Compa Sibiu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teraplast Bist and Compa Sibiu
The main advantage of trading using opposite Teraplast Bist and Compa Sibiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teraplast Bist position performs unexpectedly, Compa Sibiu 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 Compa Sibiu will offset losses from the drop in Compa Sibiu's long position.| Teraplast Bist vs. AROBS TRANSILVANIA SOFTWARE | Teraplast Bist vs. Compania Hoteliera InterContinental | Teraplast Bist vs. Infinity Capital Investments | Teraplast Bist vs. Digi Communications NV |
| Compa Sibiu vs. Compania Hoteliera InterContinental | Compa Sibiu vs. Digi Communications NV | Compa Sibiu vs. IHUNT TECHNOLOGY IMPORT EXPORT | Compa Sibiu vs. AROBS TRANSILVANIA SOFTWARE |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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