Correlation Between TRON and Gestamp Automocin
Can any of the company-specific risk be diversified away by investing in both TRON and Gestamp Automocin 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 TRON and Gestamp Automocin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and Gestamp Automocin SA, you can compare the effects of market volatilities on TRON and Gestamp Automocin 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 TRON with a short position of Gestamp Automocin. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Gestamp Automocin.
Diversification Opportunities for TRON and Gestamp Automocin
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRON and Gestamp is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Gestamp Automocin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gestamp Automocin and TRON 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 TRON are associated (or correlated) with Gestamp Automocin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gestamp Automocin has no effect on the direction of TRON i.e., TRON and Gestamp Automocin go up and down completely randomly.
Pair Corralation between TRON and Gestamp Automocin
Assuming the 90 days trading horizon TRON is expected to generate 4.87 times more return on investment than Gestamp Automocin. However, TRON is 4.87 times more volatile than Gestamp Automocin SA. It trades about 0.08 of its potential returns per unit of risk. Gestamp Automocin SA is currently generating about -0.01 per unit of risk. If you would invest 15.00 in TRON on November 2, 2024 and sell it today you would earn a total of 10.00 from holding TRON or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.2% |
| Values | Daily Returns |
TRON vs. Gestamp Automocin SA
Performance |
| Timeline |
| TRON |
| Gestamp Automocin |
TRON and Gestamp Automocin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and Gestamp Automocin
The main advantage of trading using opposite TRON and Gestamp Automocin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, Gestamp Automocin 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 Gestamp Automocin will offset losses from the drop in Gestamp Automocin's long position.The idea behind TRON and Gestamp Automocin SA 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.| Gestamp Automocin vs. Take Two Interactive Software | Gestamp Automocin vs. Kingdee International Software | Gestamp Automocin vs. USU Software AG | Gestamp Automocin vs. FORMPIPE SOFTWARE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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