Correlation Between Coor Service and Indutrade

Can any of the company-specific risk be diversified away by investing in both Coor Service and Indutrade 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 Coor Service and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coor Service Management and Indutrade AB, you can compare the effects of market volatilities on Coor Service and Indutrade 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 Coor Service with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coor Service and Indutrade.

Diversification Opportunities for Coor Service and Indutrade

-0.39

Correlation Coefficient

Coor Service  Indutrade

Very good diversification

The 3 months correlation between Coor and Indutrade is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Coor Service Management and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Coor Service 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 Coor Service Management are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Coor Service i.e., Coor Service and Indutrade go up and down completely randomly.

Pair Corralation between Coor Service and Indutrade

Assuming the 90 days trading horizon Coor Service is expected to generate 5.73 times less return on investment than Indutrade. In addition to that, Coor Service is 1.5 times more volatile than Indutrade AB. It trades about 0.02 of its total potential returns per unit of risk. Indutrade AB is currently generating about 0.14 per unit of volatility. If you would invest  27,650  in Indutrade AB on November 29, 2024 and sell it today you would earn a total of  3,750  from holding Indutrade AB or generate 13.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Coor Service Management  vs.  Indutrade AB

Coor Service Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coor Service Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Coor Service is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Indutrade AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indutrade AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indutrade unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coor Service and Indutrade

The main advantage of trading using opposite Coor Service and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.

The idea behind Coor Service Management and Indutrade AB 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.