Correlation Between Automobile and Intellian Technologies
Can any of the company-specific risk be diversified away by investing in both Automobile and Intellian Technologies 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 Intellian Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Intellian Technologies, you can compare the effects of market volatilities on Automobile and Intellian Technologies 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 Intellian Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Intellian Technologies.
Diversification Opportunities for Automobile and Intellian Technologies
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automobile and Intellian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Intellian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intellian Technologies 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 Intellian Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intellian Technologies has no effect on the direction of Automobile i.e., Automobile and Intellian Technologies go up and down completely randomly.
Pair Corralation between Automobile and Intellian Technologies
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Intellian Technologies. In addition to that, Automobile is 1.02 times more volatile than Intellian Technologies. It trades about -0.08 of its total potential returns per unit of risk. Intellian Technologies is currently generating about -0.04 per unit of volatility. If you would invest 5,480,000 in Intellian Technologies on August 27, 2024 and sell it today you would lose (1,495,000) from holding Intellian Technologies or give up 27.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Intellian Technologies
Performance |
| Timeline |
| Automobile Pc |
| Intellian Technologies |
Automobile and Intellian Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Intellian Technologies
The main advantage of trading using opposite Automobile and Intellian Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Intellian Technologies 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 Intellian Technologies will offset losses from the drop in Intellian Technologies' long position.| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM Co |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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