Correlation Between Carmit and Salomon A
Can any of the company-specific risk be diversified away by investing in both Carmit and Salomon A 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 Carmit and Salomon A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmit and Salomon A Angel, you can compare the effects of market volatilities on Carmit and Salomon A 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 Carmit with a short position of Salomon A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmit and Salomon A.
Diversification Opportunities for Carmit and Salomon A
Good diversification
The 3 months correlation between Carmit and Salomon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Carmit and Salomon A Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salomon A Angel and Carmit 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 Carmit are associated (or correlated) with Salomon A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salomon A Angel has no effect on the direction of Carmit i.e., Carmit and Salomon A go up and down completely randomly.
Pair Corralation between Carmit and Salomon A
Assuming the 90 days trading horizon Carmit is expected to under-perform the Salomon A. But the stock apears to be less risky and, when comparing its historical volatility, Carmit is 1.06 times less risky than Salomon A. The stock trades about -0.17 of its potential returns per unit of risk. The Salomon A Angel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 358,900 in Salomon A Angel on January 17, 2024 and sell it today you would earn a total of 13,500 from holding Salomon A Angel or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Carmit vs. Salomon A Angel
Performance |
| Timeline |
| Carmit |
| Salomon A Angel |
Carmit and Salomon A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmit and Salomon A
The main advantage of trading using opposite Carmit and Salomon A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmit position performs unexpectedly, Salomon A 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 Salomon A will offset losses from the drop in Salomon A's long position.The idea behind Carmit and Salomon A Angel 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.| Salomon A vs. Zanlakol | Salomon A vs. Gan Shmuel | Salomon A vs. Carmit | Salomon A vs. Sano Brunos Enterprises |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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