Correlation Between TRAINLINE PLC and HALSTEAD JAMES
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and HALSTEAD JAMES 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 TRAINLINE PLC and HALSTEAD JAMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and HALSTEAD JAMES LS 05, you can compare the effects of market volatilities on TRAINLINE PLC and HALSTEAD JAMES 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 TRAINLINE PLC with a short position of HALSTEAD JAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and HALSTEAD JAMES.
Diversification Opportunities for TRAINLINE PLC and HALSTEAD JAMES
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRAINLINE and HALSTEAD is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and HALSTEAD JAMES LS 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HALSTEAD JAMES LS and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with HALSTEAD JAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HALSTEAD JAMES LS has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and HALSTEAD JAMES go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and HALSTEAD JAMES
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 1.34 times more return on investment than HALSTEAD JAMES. However, TRAINLINE PLC is 1.34 times more volatile than HALSTEAD JAMES LS 05. It trades about 0.05 of its potential returns per unit of risk. HALSTEAD JAMES LS 05 is currently generating about 0.02 per unit of risk. If you would invest 322.00 in TRAINLINE PLC LS on September 30, 2024 and sell it today you would earn a total of 193.00 from holding TRAINLINE PLC LS or generate 59.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
TRAINLINE PLC LS vs. HALSTEAD JAMES LS 05
Performance |
Timeline |
TRAINLINE PLC LS |
HALSTEAD JAMES LS |
TRAINLINE PLC and HALSTEAD JAMES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TRAINLINE PLC and HALSTEAD JAMES
The main advantage of trading using opposite TRAINLINE PLC and HALSTEAD JAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, HALSTEAD JAMES 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 HALSTEAD JAMES will offset losses from the drop in HALSTEAD JAMES's long position.TRAINLINE PLC vs. Carsales | ||
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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