Correlation Between West International and Advenica
Can any of the company-specific risk be diversified away by investing in both West International and Advenica 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 West International and Advenica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West International AB and Advenica AB, you can compare the effects of market volatilities on West International and Advenica 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 West International with a short position of Advenica. Check out your portfolio center. Please also check ongoing floating volatility patterns of West International and Advenica.
Diversification Opportunities for West International and Advenica
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between West and Advenica is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding West International AB and Advenica AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advenica AB and West International 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 West International AB are associated (or correlated) with Advenica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advenica AB has no effect on the direction of West International i.e., West International and Advenica go up and down completely randomly.
Pair Corralation between West International and Advenica
Assuming the 90 days trading horizon West International is expected to generate 2.87 times less return on investment than Advenica. In addition to that, West International is 1.3 times more volatile than Advenica AB. It trades about 0.01 of its total potential returns per unit of risk. Advenica AB is currently generating about 0.03 per unit of volatility. If you would invest 900.00 in Advenica AB on August 25, 2024 and sell it today you would earn a total of 98.00 from holding Advenica AB or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
West International AB vs. Advenica AB
Performance |
| Timeline |
| West International |
| Advenica AB |
West International and Advenica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West International and Advenica
The main advantage of trading using opposite West International and Advenica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West International position performs unexpectedly, Advenica 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 Advenica will offset losses from the drop in Advenica's long position.| West International vs. XMReality AB | West International vs. Zaplox AB | West International vs. Urb it AB | West International vs. Sonetel AB |
| Advenica vs. SECITS Holding AB | Advenica vs. Zaplox AB | Advenica vs. XMReality AB | Advenica vs. Nicoccino Holding 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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