Correlation Between APPLIED MATERIALS and CODERE ONLINE

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

By analyzing existing cross correlation between APPLIED MATERIALS and CODERE ONLINE LUX, you can compare the effects of market volatilities on APPLIED MATERIALS and CODERE ONLINE 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 APPLIED MATERIALS with a short position of CODERE ONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and CODERE ONLINE.

Diversification Opportunities for APPLIED MATERIALS and CODERE ONLINE

-0.34

Correlation Coefficient

APPLIED MATERIALS  CODERE ONLINE

Very good diversification

The 3 months correlation between APPLIED and CODERE is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and CODERE ONLINE LUX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CODERE ONLINE LUX and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with CODERE ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CODERE ONLINE LUX has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and CODERE ONLINE go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and CODERE ONLINE

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the CODERE ONLINE. But the stock apears to be less risky and, when comparing its historical volatility, APPLIED MATERIALS is 1.13 times less risky than CODERE ONLINE. The stock trades about -0.06 of its potential returns per unit of risk. The CODERE ONLINE LUX is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  690.00  in CODERE ONLINE LUX on December 21, 2024 and sell it today you would lose (50.00) from holding CODERE ONLINE LUX or give up 7.25% of portfolio value over 90 days.

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

APPLIED MATERIALS  vs.  CODERE ONLINE LUX

APPLIED MATERIALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days APPLIED MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CODERE ONLINE LUX

Risk-Adjusted Performance

Very Weak

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

Pair Trading with APPLIED MATERIALS and CODERE ONLINE

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

The idea behind APPLIED MATERIALS and CODERE ONLINE LUX 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.