Correlation Between ABCO Electronics and Sunny Electronics
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and Sunny Electronics 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 ABCO Electronics and Sunny Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and Sunny Electronics Corp, you can compare the effects of market volatilities on ABCO Electronics and Sunny Electronics 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 ABCO Electronics with a short position of Sunny Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Sunny Electronics.
Diversification Opportunities for ABCO Electronics and Sunny Electronics
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ABCO and Sunny is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Sunny Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Electronics Corp and ABCO Electronics 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 ABCO Electronics Co are associated (or correlated) with Sunny Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Electronics Corp has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and Sunny Electronics go up and down completely randomly.
Pair Corralation between ABCO Electronics and Sunny Electronics
Assuming the 90 days trading horizon ABCO Electronics Co is expected to under-perform the Sunny Electronics. In addition to that, ABCO Electronics is 1.55 times more volatile than Sunny Electronics Corp. It trades about -0.12 of its total potential returns per unit of risk. Sunny Electronics Corp is currently generating about 0.07 per unit of volatility. If you would invest 159,500 in Sunny Electronics Corp on August 29, 2024 and sell it today you would earn a total of 3,900 from holding Sunny Electronics Corp or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. Sunny Electronics Corp
Performance |
| Timeline |
| ABCO Electronics |
| Sunny Electronics Corp |
ABCO Electronics and Sunny Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and Sunny Electronics
The main advantage of trading using opposite ABCO Electronics and Sunny Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, Sunny Electronics 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 Sunny Electronics will offset losses from the drop in Sunny Electronics' long position.| ABCO Electronics vs. Korea Real Estate | ABCO Electronics vs. Korea Ratings Co | ABCO Electronics vs. IQuest Co | ABCO Electronics vs. Wonbang Tech Co |
| Sunny Electronics vs. AptaBio Therapeutics | Sunny Electronics vs. Daewoo SBI SPAC | Sunny Electronics vs. Dream Security co | Sunny Electronics vs. Microfriend |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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