Correlation Between ALLFUNDS GROUP and TESCO PLC

Can any of the company-specific risk be diversified away by investing in both ALLFUNDS GROUP and TESCO PLC 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 ALLFUNDS GROUP and TESCO PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALLFUNDS GROUP EO 0025 and TESCO PLC ADR1, you can compare the effects of market volatilities on ALLFUNDS GROUP and TESCO PLC 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 ALLFUNDS GROUP with a short position of TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLFUNDS GROUP and TESCO PLC.

Diversification Opportunities for ALLFUNDS GROUP and TESCO PLC

0.78

Correlation Coefficient

ALLFUNDS GROUP  TESCO PLC

Poor diversification

The 3 months correlation between ALLFUNDS and TESCO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ALLFUNDS GROUP EO 0025 and TESCO PLC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC ADR1 and ALLFUNDS GROUP 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 ALLFUNDS GROUP EO 0025 are associated (or correlated) with TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC ADR1 has no effect on the direction of ALLFUNDS GROUP i.e., ALLFUNDS GROUP and TESCO PLC go up and down completely randomly.

Pair Corralation between ALLFUNDS GROUP and TESCO PLC

Assuming the 90 days horizon ALLFUNDS GROUP EO 0025 is expected to generate 1.07 times more return on investment than TESCO PLC. However, ALLFUNDS GROUP is 1.07 times more volatile than TESCO PLC ADR1. It trades about 0.32 of its potential returns per unit of risk. TESCO PLC ADR1 is currently generating about 0.14 per unit of risk. If you would invest  464.00  in ALLFUNDS GROUP EO 0025 on April 24, 2025 and sell it today you would earn a total of  275.00  from holding ALLFUNDS GROUP EO 0025 or generate 59.27% return on investment over 90 days.

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

ALLFUNDS GROUP EO 0025  vs.  TESCO PLC ADR1

ALLFUNDS GROUP EO

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALLFUNDS GROUP EO 0025 are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALLFUNDS GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

TESCO PLC ADR1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TESCO PLC ADR1 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TESCO PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALLFUNDS GROUP and TESCO PLC

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

The idea behind ALLFUNDS GROUP EO 0025 and TESCO PLC ADR1 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.