Correlation Between Automobile and Moadata
Can any of the company-specific risk be diversified away by investing in both Automobile and Moadata 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 Moadata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Moadata Co, you can compare the effects of market volatilities on Automobile and Moadata 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 Moadata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Moadata.
Diversification Opportunities for Automobile and Moadata
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and Moadata is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Moadata Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moadata 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 Moadata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moadata has no effect on the direction of Automobile i.e., Automobile and Moadata go up and down completely randomly.
Pair Corralation between Automobile and Moadata
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the Moadata. But the stock apears to be less risky and, when comparing its historical volatility, Automobile Pc is 1.26 times less risky than Moadata. The stock trades about -0.04 of its potential returns per unit of risk. The Moadata Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 334,500 in Moadata Co on August 29, 2024 and sell it today you would lose (177,400) from holding Moadata Co or give up 53.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Moadata Co
Performance |
| Timeline |
| Automobile Pc |
| Moadata |
Automobile and Moadata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Moadata
The main advantage of trading using opposite Automobile and Moadata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Moadata 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 Moadata will offset losses from the drop in Moadata's long position.| Automobile vs. Hanwha InvestmentSecurities Co | Automobile vs. Sangsin Energy Display | Automobile vs. Atinum Investment Co | Automobile vs. LB 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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