Correlation Between CELLULAR GOODS and SPORT LISBOA

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

By analyzing existing cross correlation between CELLULAR GOODS LS and SPORT LISBOA E, you can compare the effects of market volatilities on CELLULAR GOODS and SPORT LISBOA 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 CELLULAR GOODS with a short position of SPORT LISBOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CELLULAR GOODS and SPORT LISBOA.

Diversification Opportunities for CELLULAR GOODS and SPORT LISBOA

0.01

Correlation Coefficient

CELLULAR GOODS  SPORT LISBOA

Significant diversification

The 3 months correlation between CELLULAR and SPORT is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CELLULAR GOODS LS and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and CELLULAR GOODS 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 CELLULAR GOODS LS are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of CELLULAR GOODS i.e., CELLULAR GOODS and SPORT LISBOA go up and down completely randomly.

Pair Corralation between CELLULAR GOODS and SPORT LISBOA

If you would invest  0.05  in CELLULAR GOODS LS on October 5, 2024 and sell it today you would earn a total of  0.00  from holding CELLULAR GOODS LS or generate 0.0% return on investment over 90 days.

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

CELLULAR GOODS LS  vs.  SPORT LISBOA E

CELLULAR GOODS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CELLULAR GOODS LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CELLULAR GOODS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CELLULAR GOODS and SPORT LISBOA

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

The idea behind CELLULAR GOODS LS and SPORT LISBOA E 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.