Correlation Between ABCO Electronics and Asia Technology
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and Asia Technology 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 Asia Technology 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 Asia Technology Co, you can compare the effects of market volatilities on ABCO Electronics and Asia Technology 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 Asia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Asia Technology.
Diversification Opportunities for ABCO Electronics and Asia Technology
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABCO and Asia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Asia Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Technology 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 Asia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Technology has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and Asia Technology go up and down completely randomly.
Pair Corralation between ABCO Electronics and Asia Technology
Assuming the 90 days trading horizon ABCO Electronics Co is expected to under-perform the Asia Technology. In addition to that, ABCO Electronics is 2.0 times more volatile than Asia Technology Co. It trades about -0.17 of its total potential returns per unit of risk. Asia Technology Co is currently generating about 0.02 per unit of volatility. If you would invest 216,535 in Asia Technology Co on September 3, 2024 and sell it today you would earn a total of 7,965 from holding Asia Technology Co or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. Asia Technology Co
Performance |
| Timeline |
| ABCO Electronics |
| Asia Technology |
ABCO Electronics and Asia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and Asia Technology
The main advantage of trading using opposite ABCO Electronics and Asia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, Asia Technology 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 Asia Technology will offset losses from the drop in Asia Technology's long position.| ABCO Electronics vs. Daishin Information Communications | ABCO Electronics vs. Barunson Entertainment Arts | ABCO Electronics vs. SM Entertainment Co | ABCO Electronics vs. Inzi Display CoLtd |
| Asia Technology vs. LG Display | Asia Technology vs. Hyundai Motor | Asia Technology vs. Hyundai Motor Co | Asia Technology vs. Hyundai Motor 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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