Correlation Between N Citron and Wave Electronics
Can any of the company-specific risk be diversified away by investing in both N Citron and Wave Electronics 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 N Citron and Wave Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between N Citron and Wave Electronics Co, you can compare the effects of market volatilities on N Citron and Wave Electronics 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 N Citron with a short position of Wave Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of N Citron and Wave Electronics.
Diversification Opportunities for N Citron and Wave Electronics
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 101400 and Wave is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding N Citron and Wave Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Electronics and N Citron 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 N Citron are associated (or correlated) with Wave Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Electronics has no effect on the direction of N Citron i.e., N Citron and Wave Electronics go up and down completely randomly.
Pair Corralation between N Citron and Wave Electronics
Assuming the 90 days trading horizon N Citron is expected to under-perform the Wave Electronics. But the stock apears to be less risky and, when comparing its historical volatility, N Citron is 1.32 times less risky than Wave Electronics. The stock trades about -0.06 of its potential returns per unit of risk. The Wave Electronics Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 620,000 in Wave Electronics Co on September 4, 2024 and sell it today you would lose (245,000) from holding Wave Electronics Co or give up 39.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
N Citron vs. Wave Electronics Co
Performance |
| Timeline |
| N Citron |
| Wave Electronics |
N Citron and Wave Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with N Citron and Wave Electronics
The main advantage of trading using opposite N Citron and Wave Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if N Citron position performs unexpectedly, Wave Electronics 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 Wave Electronics will offset losses from the drop in Wave Electronics' long position.| N Citron vs. Dongsin Engineering Construction | N Citron vs. Doosan Fuel Cell | N Citron vs. Daishin Balance 1 | N Citron vs. Total Soft Bank |
| Wave Electronics vs. Dongsin Engineering Construction | Wave Electronics vs. Doosan Fuel Cell | Wave Electronics vs. Daishin Balance 1 | Wave Electronics vs. Total Soft Bank |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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