Correlation Between 5 A and 15 PB

Can any of the company-specific risk be diversified away by investing in both 5 A and 15 PB 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 5 A and 15 PB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5 A COLA 20 and 15 PB 27, you can compare the effects of market volatilities on 5 A and 15 PB 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 5 A with a short position of 15 PB. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5 A and 15 PB.

Diversification Opportunities for 5 A and 15 PB

0.0

Correlation Coefficient

5 A  15 PB

Pay attention - limited upside

The 3 months correlation between AUD484 and PB566 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding 5 A COLA 20 and 15 PB 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 15 PB 27 and 5 A 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 5 A COLA 20 are associated (or correlated) with 15 PB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 15 PB 27 has no effect on the direction of 5 A i.e., 5 A and 15 PB go up and down completely randomly.

Pair Corralation between 5 A and 15 PB

If you would invest (100.00) in 15 PB 27 on September 27, 2024 and sell it today you would earn a total of  100.00  from holding 15 PB 27 or generate -100.0% return on investment over 90 days.

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

5 A COLA 20  vs.  15 PB 27

5 A A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5 A COLA 20 has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental indicators, 5 A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

15 PB 27

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 15 PB 27 has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, 15 PB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 5 A and 15 PB

The main advantage of trading using opposite 5 A and 15 PB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5 A position performs unexpectedly, 15 PB 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 15 PB will offset losses from the drop in 15 PB's long position.

The idea behind 5 A COLA 20 and 15 PB 27 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.