Correlation Between Salomon A and Carmit
Can any of the company-specific risk be diversified away by investing in both Salomon A and Carmit 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 Salomon A and Carmit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salomon A Angel and Carmit, you can compare the effects of market volatilities on Salomon A and Carmit 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 Salomon A with a short position of Carmit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salomon A and Carmit.
Diversification Opportunities for Salomon A and Carmit
Pay attention - limited upside
The 3 months correlation between Salomon and Carmit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Salomon A Angel and Carmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmit and Salomon 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 Salomon A Angel are associated (or correlated) with Carmit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmit has no effect on the direction of Salomon A i.e., Salomon A and Carmit go up and down completely randomly.
Pair Corralation between Salomon A and Carmit
If you would invest (100.00) in Carmit on January 25, 2024 and sell it today you would earn a total of 100.00 from holding Carmit 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 |
Salomon A Angel vs. Carmit
Performance |
| Timeline |
| Salomon A Angel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Carmit |
Salomon A and Carmit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salomon A and Carmit
The main advantage of trading using opposite Salomon A and Carmit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salomon A position performs unexpectedly, Carmit 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 Carmit will offset losses from the drop in Carmit's long position.The idea behind Salomon A Angel and Carmit 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.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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