Correlation Between Auto Trader and Helios Towers
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Helios Towers 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 Auto Trader and Helios Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Helios Towers Plc, you can compare the effects of market volatilities on Auto Trader and Helios Towers 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 Auto Trader with a short position of Helios Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Helios Towers.
Diversification Opportunities for Auto Trader and Helios Towers
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Auto and Helios is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Helios Towers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Towers Plc and Auto Trader 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 Auto Trader Group are associated (or correlated) with Helios Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Towers Plc has no effect on the direction of Auto Trader i.e., Auto Trader and Helios Towers go up and down completely randomly.
Pair Corralation between Auto Trader and Helios Towers
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Helios Towers. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 1.55 times less risky than Helios Towers. The stock trades about -0.07 of its potential returns per unit of risk. The Helios Towers Plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9,140 in Helios Towers Plc on December 30, 2024 and sell it today you would earn a total of 1,860 from holding Helios Towers Plc or generate 20.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Auto Trader Group vs. Helios Towers Plc
Performance |
Timeline |
Auto Trader Group |
Helios Towers Plc |
Auto Trader and Helios Towers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Auto Trader and Helios Towers
The main advantage of trading using opposite Auto Trader and Helios Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Helios Towers 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 Helios Towers will offset losses from the drop in Helios Towers' long position.Auto Trader vs. Applied Materials | Auto Trader vs. United Airlines Holdings | Auto Trader vs. MediaZest plc | Auto Trader vs. Samsung Electronics Co |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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