Correlation Between ABCO Electronics and People Technology
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and People 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 People 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 People Technology, you can compare the effects of market volatilities on ABCO Electronics and People 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 People Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and People Technology.
Diversification Opportunities for ABCO Electronics and People Technology
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABCO and People is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and People Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People 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 People Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Technology has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and People Technology go up and down completely randomly.
Pair Corralation between ABCO Electronics and People Technology
Assuming the 90 days trading horizon ABCO Electronics Co is expected to generate 0.8 times more return on investment than People Technology. However, ABCO Electronics Co is 1.26 times less risky than People Technology. It trades about -0.12 of its potential returns per unit of risk. People Technology is currently generating about -0.13 per unit of risk. If you would invest 520,000 in ABCO Electronics Co on August 29, 2024 and sell it today you would lose (43,000) from holding ABCO Electronics Co or give up 8.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. People Technology
Performance |
| Timeline |
| ABCO Electronics |
| People Technology |
ABCO Electronics and People Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and People Technology
The main advantage of trading using opposite ABCO Electronics and People Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, People 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 People Technology will offset losses from the drop in People Technology's 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 |
| People Technology vs. Samsung Electronics Co | People Technology vs. Samsung Electronics Co | People Technology vs. Hyundai Motor Co | People Technology vs. Hyundai Motor |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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