Correlation Between A Tech and LB Investment
Can any of the company-specific risk be diversified away by investing in both A Tech and LB Investment 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 A Tech and LB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Tech Solution Co and LB Investment, you can compare the effects of market volatilities on A Tech and LB Investment 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 A Tech with a short position of LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of A Tech and LB Investment.
Diversification Opportunities for A Tech and LB Investment
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 071670 and 309960 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment and A Tech 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 A Tech Solution Co are associated (or correlated) with LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of A Tech i.e., A Tech and LB Investment go up and down completely randomly.
Pair Corralation between A Tech and LB Investment
Assuming the 90 days trading horizon A Tech Solution Co is expected to generate 1.41 times more return on investment than LB Investment. However, A Tech is 1.41 times more volatile than LB Investment. It trades about 0.27 of its potential returns per unit of risk. LB Investment is currently generating about -0.09 per unit of risk. If you would invest 531,000 in A Tech Solution Co on October 14, 2024 and sell it today you would earn a total of 82,000 from holding A Tech Solution Co or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
A Tech Solution Co vs. LB Investment
Performance |
| Timeline |
| A Tech Solution |
| LB Investment |
A Tech and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A Tech and LB Investment
The main advantage of trading using opposite A Tech and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Tech position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| A Tech vs. LB Investment | A Tech vs. EBEST Investment Securities | A Tech vs. Woori Technology Investment | A Tech vs. KTB Investment Securities |
| LB Investment vs. A Tech Solution Co | LB Investment vs. KMH Hitech Co | LB Investment vs. Yura Tech Co | LB Investment vs. RFTech 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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