Correlation Between Cable One and Fras Le

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

By analyzing existing cross correlation between Cable One and Fras le SA, you can compare the effects of market volatilities on Cable One and Fras Le 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 Cable One with a short position of Fras Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Fras Le.

Diversification Opportunities for Cable One and Fras Le

-0.1

Correlation Coefficient

Cable One  Fras Le

Good diversification

The 3 months correlation between Cable and Fras is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA and Cable One 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 Cable One are associated (or correlated) with Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Cable One i.e., Cable One and Fras Le go up and down completely randomly.

Pair Corralation between Cable One and Fras Le

Assuming the 90 days trading horizon Cable One is expected to generate 1.6 times more return on investment than Fras Le. However, Cable One is 1.6 times more volatile than Fras le SA. It trades about 0.18 of its potential returns per unit of risk. Fras le SA is currently generating about 0.01 per unit of risk. If you would invest  987.00  in Cable One on September 4, 2024 and sell it today you would earn a total of  257.00  from holding Cable One or generate 26.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Cable One  vs.  Fras le SA

Cable One

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One sustained solid returns over the last few months and may actually be approaching a breakup point.

Fras le SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fras le SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fras Le is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cable One and Fras Le

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

The idea behind Cable One and Fras le SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.