Correlation Between Technos SA and Advance Auto
Can any of the company-specific risk be diversified away by investing in both Technos SA and Advance Auto 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 Technos SA and Advance Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technos SA and Advance Auto Parts, you can compare the effects of market volatilities on Technos SA and Advance Auto 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 Technos SA with a short position of Advance Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technos SA and Advance Auto.
Diversification Opportunities for Technos SA and Advance Auto
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Technos and Advance is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Technos SA and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and Technos SA 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 Technos SA are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of Technos SA i.e., Technos SA and Advance Auto go up and down completely randomly.
Pair Corralation between Technos SA and Advance Auto
Assuming the 90 days trading horizon Technos SA is expected to generate 1.84 times less return on investment than Advance Auto. In addition to that, Technos SA is 1.13 times more volatile than Advance Auto Parts. It trades about 0.05 of its total potential returns per unit of risk. Advance Auto Parts is currently generating about 0.1 per unit of volatility. If you would invest 1,392 in Advance Auto Parts on September 24, 2024 and sell it today you would earn a total of 246.00 from holding Advance Auto Parts or generate 17.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Technos SA vs. Advance Auto Parts
Performance |
Timeline |
Technos SA |
Advance Auto Parts |
Technos SA and Advance Auto Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Technos SA and Advance Auto
The main advantage of trading using opposite Technos SA and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technos SA position performs unexpectedly, Advance Auto 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 Advance Auto will offset losses from the drop in Advance Auto's long position.Technos SA vs. Engie Brasil Energia | Technos SA vs. Grendene SA | Technos SA vs. M Dias Branco | Technos SA vs. BTG Pactual Logstica |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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