Correlation Between Northking Information and Advanced Technology
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By analyzing existing cross correlation between Northking Information Technology and Advanced Technology Materials, you can compare the effects of market volatilities on Northking Information and Advanced Technology 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 Northking Information with a short position of Advanced Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northking Information and Advanced Technology.
Diversification Opportunities for Northking Information and Advanced Technology
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northking and Advanced is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Northking Information Technolo and Advanced Technology Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Technology and Northking Information 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 Northking Information Technology are associated (or correlated) with Advanced Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Technology has no effect on the direction of Northking Information i.e., Northking Information and Advanced Technology go up and down completely randomly.
Pair Corralation between Northking Information and Advanced Technology
Assuming the 90 days trading horizon Northking Information is expected to generate 2.47 times less return on investment than Advanced Technology. In addition to that, Northking Information is 1.21 times more volatile than Advanced Technology Materials. It trades about 0.02 of its total potential returns per unit of risk. Advanced Technology Materials is currently generating about 0.05 per unit of volatility. If you would invest 861.00 in Advanced Technology Materials on August 31, 2024 and sell it today you would earn a total of 360.00 from holding Advanced Technology Materials or generate 41.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northking Information Technolo vs. Advanced Technology Materials
Performance |
| Timeline |
| Northking Information |
| Advanced Technology |
Northking Information and Advanced Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northking Information and Advanced Technology
The main advantage of trading using opposite Northking Information and Advanced Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northking Information position performs unexpectedly, Advanced Technology 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 Advanced Technology will offset losses from the drop in Advanced Technology's long position.The idea behind Northking Information Technology and Advanced Technology Materials 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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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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