Correlation Between Automobile and SV Investment
Can any of the company-specific risk be diversified away by investing in both Automobile and SV 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 SV 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 SV Investment, you can compare the effects of market volatilities on Automobile and SV 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 SV Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and SV Investment.
Diversification Opportunities for Automobile and SV Investment
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automobile and 289080 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and SV Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SV Investment 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 SV Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SV Investment has no effect on the direction of Automobile i.e., Automobile and SV Investment go up and down completely randomly.
Pair Corralation between Automobile and SV Investment
Assuming the 90 days trading horizon Automobile Pc is expected to under-perform the SV Investment. In addition to that, Automobile is 1.16 times more volatile than SV Investment. It trades about -0.08 of its total potential returns per unit of risk. SV Investment is currently generating about -0.03 per unit of volatility. If you would invest 189,925 in SV Investment on September 12, 2024 and sell it today you would lose (67,325) from holding SV Investment or give up 35.45% 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. SV Investment
Performance |
| Timeline |
| Automobile Pc |
| SV Investment |
Automobile and SV Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and SV Investment
The main advantage of trading using opposite Automobile and SV Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, SV 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 SV Investment will offset losses from the drop in SV Investment's long position.| Automobile vs. Daou Data Corp | Automobile vs. Solution Advanced Technology | Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind |
| SV Investment vs. Daou Data Corp | SV Investment vs. Aju IB Investment | SV Investment vs. EBEST Investment Securities | SV Investment vs. Atinum Investment Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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