Correlation Between ABCO Electronics and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and Choil Aluminum 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 Choil Aluminum 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 Choil Aluminum, you can compare the effects of market volatilities on ABCO Electronics and Choil Aluminum 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 Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Choil Aluminum.
Diversification Opportunities for ABCO Electronics and Choil Aluminum
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABCO and Choil is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum 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 Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and Choil Aluminum go up and down completely randomly.
Pair Corralation between ABCO Electronics and Choil Aluminum
Assuming the 90 days trading horizon ABCO Electronics Co is expected to generate 2.68 times more return on investment than Choil Aluminum. However, ABCO Electronics is 2.68 times more volatile than Choil Aluminum. It trades about 0.48 of its potential returns per unit of risk. Choil Aluminum is currently generating about 0.38 per unit of risk. If you would invest 449,000 in ABCO Electronics Co on October 30, 2024 and sell it today you would earn a total of 121,000 from holding ABCO Electronics Co or generate 26.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. Choil Aluminum
Performance |
| Timeline |
| ABCO Electronics |
| Choil Aluminum |
ABCO Electronics and Choil Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and Choil Aluminum
The main advantage of trading using opposite ABCO Electronics and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's long position.| ABCO Electronics vs. Youl Chon Chemical | ABCO Electronics vs. Kukdong Oil Chemicals | ABCO Electronics vs. Kukdo Chemical Co | ABCO Electronics vs. Kg Chemical |
| Choil Aluminum vs. Hotel Shilla Co | Choil Aluminum vs. Lotte Data Communication | Choil Aluminum vs. NICE Information Service | Choil Aluminum vs. Insung Information 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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