Correlation Between ABCO Electronics and SAMG Entertainment
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and SAMG Entertainment 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 SAMG Entertainment 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 SAMG Entertainment Co, you can compare the effects of market volatilities on ABCO Electronics and SAMG Entertainment 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 SAMG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and SAMG Entertainment.
Diversification Opportunities for ABCO Electronics and SAMG Entertainment
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABCO and SAMG is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and SAMG Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMG Entertainment 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 SAMG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMG Entertainment has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and SAMG Entertainment go up and down completely randomly.
Pair Corralation between ABCO Electronics and SAMG Entertainment
Assuming the 90 days trading horizon ABCO Electronics Co is expected to under-perform the SAMG Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, ABCO Electronics Co is 1.21 times less risky than SAMG Entertainment. The stock trades about -0.1 of its potential returns per unit of risk. The SAMG Entertainment Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,095,000 in SAMG Entertainment Co on October 27, 2024 and sell it today you would lose (556,000) from holding SAMG Entertainment Co or give up 26.54% 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. SAMG Entertainment Co
Performance |
| Timeline |
| ABCO Electronics |
| SAMG Entertainment |
ABCO Electronics and SAMG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and SAMG Entertainment
The main advantage of trading using opposite ABCO Electronics and SAMG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, SAMG Entertainment 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 SAMG Entertainment will offset losses from the drop in SAMG Entertainment's long position.| ABCO Electronics vs. National Plastic Co | ABCO Electronics vs. Ecoplastic | ABCO Electronics vs. Namhae Chemical | ABCO Electronics vs. KPX Green Chemical |
| SAMG Entertainment vs. SK Telecom Co | SAMG Entertainment vs. Daishin Information Communications | SAMG Entertainment vs. Daejung Chemicals Metals | SAMG Entertainment vs. Hanwha Chemical Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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