Correlation Between ABCO Electronics and Rainbow Robotics
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and Rainbow Robotics 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 Rainbow Robotics 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 Rainbow Robotics, you can compare the effects of market volatilities on ABCO Electronics and Rainbow Robotics 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 Rainbow Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Rainbow Robotics.
Diversification Opportunities for ABCO Electronics and Rainbow Robotics
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ABCO and Rainbow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Rainbow Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainbow Robotics 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 Rainbow Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainbow Robotics has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and Rainbow Robotics go up and down completely randomly.
Pair Corralation between ABCO Electronics and Rainbow Robotics
Assuming the 90 days trading horizon ABCO Electronics Co is expected to under-perform the Rainbow Robotics. But the stock apears to be less risky and, when comparing its historical volatility, ABCO Electronics Co is 1.2 times less risky than Rainbow Robotics. The stock trades about -0.07 of its potential returns per unit of risk. The Rainbow Robotics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15,140,000 in Rainbow Robotics on November 3, 2024 and sell it today you would earn a total of 14,810,000 from holding Rainbow Robotics or generate 97.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
ABCO Electronics Co vs. Rainbow Robotics
Performance |
| Timeline |
| ABCO Electronics |
| Rainbow Robotics |
ABCO Electronics and Rainbow Robotics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and Rainbow Robotics
The main advantage of trading using opposite ABCO Electronics and Rainbow Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, Rainbow Robotics 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 Rainbow Robotics will offset losses from the drop in Rainbow Robotics' long position.| ABCO Electronics vs. Shinsegae Food | ABCO Electronics vs. Sam Yang Foods | ABCO Electronics vs. Sewoon Medical Co | ABCO Electronics vs. Sempio Foods Co |
| Rainbow Robotics vs. Raontech | Rainbow Robotics vs. V One Tech Co | Rainbow Robotics vs. Lion Chemtech Co | Rainbow Robotics vs. PNC Technologies 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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