Correlation Between Automobile and SBI Investment
Can any of the company-specific risk be diversified away by investing in both Automobile and SBI Investment 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 Automobile and SBI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and SBI Investment KOREA, you can compare the effects of market volatilities on Automobile and SBI Investment 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 Automobile with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and SBI Investment.
Diversification Opportunities for Automobile and SBI Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Automobile and SBI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and Automobile 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 Automobile Pc are associated (or correlated) with SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of Automobile i.e., Automobile and SBI Investment go up and down completely randomly.
Pair Corralation between Automobile and SBI Investment
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the SBI Investment. In addition to that, Automobile is 1.34 times more volatile than SBI Investment KOREA. It trades about -0.07 of its total potential returns per unit of risk. SBI Investment KOREA is currently generating about -0.01 per unit of volatility. If you would invest 84,900 in SBI Investment KOREA on August 29, 2024 and sell it today you would lose (12,500) from holding SBI Investment KOREA or give up 14.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. SBI Investment KOREA
Performance |
| Timeline |
| Automobile Pc |
| SBI Investment KOREA |
Automobile and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and SBI Investment
The main advantage of trading using opposite Automobile and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, SBI Investment 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 SBI Investment will offset losses from the drop in SBI Investment's long position.| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM Co |
| SBI Investment vs. Daekyung Machinery Engineering | SBI Investment vs. PlayD Co | SBI Investment vs. Playgram Co | SBI Investment vs. Camus Engineering Construction |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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