Can any of the company-specific risk be diversified away by investing in both Adgar Investments and Ashtrom 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 Adgar Investments and Ashtrom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adgar Investments and and Ashtrom Group, you can compare the effects of market volatilities on Adgar Investments and Ashtrom 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 Adgar Investments with a short position of Ashtrom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adgar Investments and Ashtrom.
Diversification Opportunities for Adgar Investments and Ashtrom
The 3 months correlation between Adgar and Ashtrom is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Adgar Investments and and Ashtrom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtrom Group and Adgar Investments 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 Adgar Investments and are associated (or correlated) with Ashtrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtrom Group has no effect on the direction of Adgar Investments i.e., Adgar Investments and Ashtrom go up and down completely randomly.
Pair Corralation between Adgar Investments and Ashtrom
Assuming the 90 days trading horizon Adgar Investments and is expected to generate 0.71 times more return on investment than Ashtrom. However, Adgar Investments and is 1.41 times less risky than Ashtrom. It trades about -0.05 of its potential returns per unit of risk. Ashtrom Group is currently generating about -0.05 per unit of risk. If you would invest 50,500 in Adgar Investments and on March 6, 2024 and sell it today you would lose (4,970) from holding Adgar Investments and or give up 9.84% of portfolio value over 90 days.
Over the last 90 days Adgar Investments and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Over the last 90 days Ashtrom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.