Correlation Between System and A Tech
Can any of the company-specific risk be diversified away by investing in both System and A Tech 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 System and A Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and A Tech Solution Co, you can compare the effects of market volatilities on System and A Tech 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 System with a short position of A Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and A Tech.
Diversification Opportunities for System and A Tech
Average diversification
The 3 months correlation between System and 071670 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and A Tech Solution Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Tech Solution and System 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 System and Application are associated (or correlated) with A Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Tech Solution has no effect on the direction of System i.e., System and A Tech go up and down completely randomly.
Pair Corralation between System and A Tech
Assuming the 90 days trading horizon System is expected to generate 3.86 times less return on investment than A Tech. In addition to that, System is 1.14 times more volatile than A Tech Solution Co. It trades about 0.07 of its total potential returns per unit of risk. A Tech Solution Co is currently generating about 0.3 per unit of volatility. If you would invest 522,000 in A Tech Solution Co on October 12, 2024 and sell it today you would earn a total of 92,000 from holding A Tech Solution Co or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. A Tech Solution Co
Performance |
| Timeline |
| System and Application |
| A Tech Solution |
System and A Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and A Tech
The main advantage of trading using opposite System and A Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, A Tech 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 A Tech will offset losses from the drop in A Tech's long position.| System vs. DB Insurance Co | System vs. MetaLabs Co | System vs. Daejung Chemicals Metals | System vs. Korean Reinsurance Co |
| A Tech vs. Taegu Broadcasting | A Tech vs. Hanjin Transportation Co | A Tech vs. KB Financial Group | A Tech vs. System and Application |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |