Correlation Between CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY

Can any of the company-specific risk be diversified away by investing in both CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY 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 CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CUSTODIAN INVESTMENT PLC and INTERNATIONAL ENERGY INSURANCE, you can compare the effects of market volatilities on CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY 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 CUSTODIAN INVESTMENT with a short position of INTERNATIONAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY.

Diversification Opportunities for CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY

0.49

Correlation Coefficient

CUSTODIAN INVESTMENT  INTERNATIONAL ENERGY

Very weak diversification

The 3 months correlation between CUSTODIAN and INTERNATIONAL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CUSTODIAN INVESTMENT PLC and INTERNATIONAL ENERGY INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL ENERGY and CUSTODIAN INVESTMENT 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 CUSTODIAN INVESTMENT PLC are associated (or correlated) with INTERNATIONAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL ENERGY has no effect on the direction of CUSTODIAN INVESTMENT i.e., CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY go up and down completely randomly.

Pair Corralation between CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY

Assuming the 90 days trading horizon CUSTODIAN INVESTMENT PLC is expected to generate 0.87 times more return on investment than INTERNATIONAL ENERGY. However, CUSTODIAN INVESTMENT PLC is 1.16 times less risky than INTERNATIONAL ENERGY. It trades about -0.01 of its potential returns per unit of risk. INTERNATIONAL ENERGY INSURANCE is currently generating about -0.03 per unit of risk. If you would invest  1,300  in CUSTODIAN INVESTMENT PLC on September 13, 2024 and sell it today you would lose (40.00) from holding CUSTODIAN INVESTMENT PLC or give up 3.08% of portfolio value over 90 days.

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

CUSTODIAN INVESTMENT PLC  vs.  INTERNATIONAL ENERGY INSURANCE

CUSTODIAN INVESTMENT PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CUSTODIAN INVESTMENT PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CUSTODIAN INVESTMENT is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

INTERNATIONAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERNATIONAL ENERGY INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INTERNATIONAL ENERGY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CUSTODIAN INVESTMENT and INTERNATIONAL ENERGY

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

The idea behind CUSTODIAN INVESTMENT PLC and INTERNATIONAL ENERGY INSURANCE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.