Correlation Between Stic Investments and Mobile Appliance

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Can any of the company-specific risk be diversified away by investing in both Stic Investments and Mobile Appliance 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 Stic Investments and Mobile Appliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stic Investments and Mobile Appliance, you can compare the effects of market volatilities on Stic Investments and Mobile Appliance 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 Stic Investments with a short position of Mobile Appliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stic Investments and Mobile Appliance.

Diversification Opportunities for Stic Investments and Mobile Appliance

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Stic and Mobile is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Stic Investments and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance and Stic Investments 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 Stic Investments are associated (or correlated) with Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of Stic Investments i.e., Stic Investments and Mobile Appliance go up and down completely randomly.

Pair Corralation between Stic Investments and Mobile Appliance

Assuming the 90 days trading horizon Stic Investments is expected to generate 1.03 times less return on investment than Mobile Appliance. But when comparing it to its historical volatility, Stic Investments is 1.76 times less risky than Mobile Appliance. It trades about 0.06 of its potential returns per unit of risk. Mobile Appliance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  209,000  in Mobile Appliance on September 1, 2024 and sell it today you would earn a total of  3,500  from holding Mobile Appliance or generate 1.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Stic Investments  vs.  Mobile Appliance

 Performance 
       Timeline  
Stic Investments 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Stic Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Stic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mobile Appliance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mobile Appliance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mobile Appliance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stic Investments and Mobile Appliance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stic Investments and Mobile Appliance

The main advantage of trading using opposite Stic Investments and Mobile Appliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stic Investments position performs unexpectedly, Mobile Appliance 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 Mobile Appliance will offset losses from the drop in Mobile Appliance's long position.
The idea behind Stic Investments and Mobile Appliance 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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