Correlation Between Value Added and Automobile
Can any of the company-specific risk be diversified away by investing in both Value Added and Automobile 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 Value Added and Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Added Technology and Automobile Pc, you can compare the effects of market volatilities on Value Added and Automobile 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 Value Added with a short position of Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Added and Automobile.
Diversification Opportunities for Value Added and Automobile
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Value and Automobile is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Value Added Technology and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc and Value Added 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 Value Added Technology are associated (or correlated) with Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Value Added i.e., Value Added and Automobile go up and down completely randomly.
Pair Corralation between Value Added and Automobile
Assuming the 90 days trading horizon Value Added Technology is expected to under-perform the Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Value Added Technology is 2.25 times less risky than Automobile. The stock trades about -0.28 of its potential returns per unit of risk. The Automobile Pc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 71,700 in Automobile Pc on September 3, 2024 and sell it today you would lose (3,700) from holding Automobile Pc or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Added Technology vs. Automobile Pc
Performance |
| Timeline |
| Value Added Technology |
| Automobile Pc |
Value Added and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Added and Automobile
The main advantage of trading using opposite Value Added and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Added position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Value Added vs. DIO Corporation | Value Added vs. Medy Tox | Value Added vs. InBody CoLtd | Value Added vs. Soulbrain Holdings Co |
| Automobile vs. Korea Real Estate | Automobile vs. Busan Industrial Co | Automobile vs. UNISEM Co | Automobile vs. RPBio Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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