Correlation Between COMMERCIAL VEHICLE and SPORT LISBOA

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

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

Diversification Opportunities for COMMERCIAL VEHICLE and SPORT LISBOA

0.28

Correlation Coefficient

COMMERCIAL VEHICLE  SPORT LISBOA

Modest diversification

The 3 months correlation between COMMERCIAL and SPORT is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and SPORT LISBOA go up and down completely randomly.

Pair Corralation between COMMERCIAL VEHICLE and SPORT LISBOA

Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the SPORT LISBOA. In addition to that, COMMERCIAL VEHICLE is 2.62 times more volatile than SPORT LISBOA E. It trades about -0.06 of its total potential returns per unit of risk. SPORT LISBOA E is currently generating about -0.04 per unit of volatility. If you would invest  331.00  in SPORT LISBOA E on October 4, 2024 and sell it today you would lose (18.00) from holding SPORT LISBOA E or give up 5.44% of portfolio value over 90 days.

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

COMMERCIAL VEHICLE  vs.  SPORT LISBOA E

COMMERCIAL VEHICLE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMMERCIAL VEHICLE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 COMMERCIAL VEHICLE and SPORT LISBOA

The main advantage of trading using opposite COMMERCIAL VEHICLE and SPORT LISBOA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.