Correlation Between Viscofan and Berkeley Energia
Can any of the company-specific risk be diversified away by investing in both Viscofan and Berkeley Energia 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 Viscofan and Berkeley Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viscofan and Berkeley Energia Limited, you can compare the effects of market volatilities on Viscofan and Berkeley Energia 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 Viscofan with a short position of Berkeley Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viscofan and Berkeley Energia.
Diversification Opportunities for Viscofan and Berkeley Energia
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Viscofan and Berkeley is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Viscofan and Berkeley Energia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Energia and Viscofan 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 Viscofan are associated (or correlated) with Berkeley Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Energia has no effect on the direction of Viscofan i.e., Viscofan and Berkeley Energia go up and down completely randomly.
Pair Corralation between Viscofan and Berkeley Energia
Assuming the 90 days trading horizon Viscofan is expected to generate 0.36 times more return on investment than Berkeley Energia. However, Viscofan is 2.81 times less risky than Berkeley Energia. It trades about 0.09 of its potential returns per unit of risk. Berkeley Energia Limited is currently generating about 0.01 per unit of risk. If you would invest 5,970 in Viscofan on October 20, 2024 and sell it today you would earn a total of 60.00 from holding Viscofan or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viscofan vs. Berkeley Energia Limited
Performance |
| Timeline |
| Viscofan |
| Berkeley Energia |
Viscofan and Berkeley Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viscofan and Berkeley Energia
The main advantage of trading using opposite Viscofan and Berkeley Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viscofan position performs unexpectedly, Berkeley Energia 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 Berkeley Energia will offset losses from the drop in Berkeley Energia's long position.The idea behind Viscofan and Berkeley Energia Limited 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.| Berkeley Energia vs. Vale SA | Berkeley Energia vs. Lingotes | Berkeley Energia vs. Banco de Sabadell | Berkeley Energia vs. Viscofan |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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