Correlation Between ABCO Electronics and SBI Investment
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and SBI 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 ABCO Electronics and SBI Investment 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 SBI Investment KOREA, you can compare the effects of market volatilities on ABCO Electronics and SBI 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 ABCO Electronics with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and SBI Investment.
Diversification Opportunities for ABCO Electronics and SBI Investment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABCO and SBI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA 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 SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and SBI Investment go up and down completely randomly.
Pair Corralation between ABCO Electronics and SBI Investment
Assuming the 90 days trading horizon ABCO Electronics Co is expected to under-perform the SBI Investment. In addition to that, ABCO Electronics is 1.07 times more volatile than SBI Investment KOREA. It trades about -0.21 of its total potential returns per unit of risk. SBI Investment KOREA is currently generating about 0.11 per unit of volatility. If you would invest 68,600 in SBI Investment KOREA on September 1, 2024 and sell it today you would earn a total of 4,300 from holding SBI Investment KOREA or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. SBI Investment KOREA
Performance |
| Timeline |
| ABCO Electronics |
| SBI Investment KOREA |
ABCO Electronics and SBI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and SBI Investment
The main advantage of trading using opposite ABCO Electronics and SBI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, SBI 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 SBI Investment will offset losses from the drop in SBI Investment's long position.| ABCO Electronics vs. Dongsin Engineering Construction | ABCO Electronics vs. Doosan Fuel Cell | ABCO Electronics vs. Daishin Balance 1 | ABCO Electronics vs. Total Soft Bank |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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