Correlation Between MS Autotech and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both MS Autotech and ABCO 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 MS Autotech and ABCO Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MS Autotech CoLtd and ABCO Electronics Co, you can compare the effects of market volatilities on MS Autotech and ABCO 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 MS Autotech with a short position of ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MS Autotech and ABCO Electronics.
Diversification Opportunities for MS Autotech and ABCO Electronics
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 123040 and ABCO is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding MS Autotech CoLtd and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics and MS Autotech 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 MS Autotech CoLtd are associated (or correlated) with ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of MS Autotech i.e., MS Autotech and ABCO Electronics go up and down completely randomly.
Pair Corralation between MS Autotech and ABCO Electronics
Assuming the 90 days trading horizon MS Autotech CoLtd is expected to generate 0.95 times more return on investment than ABCO Electronics. However, MS Autotech CoLtd is 1.05 times less risky than ABCO Electronics. It trades about -0.2 of its potential returns per unit of risk. ABCO Electronics Co is currently generating about -0.21 per unit of risk. If you would invest 310,500 in MS Autotech CoLtd on September 1, 2024 and sell it today you would lose (40,500) from holding MS Autotech CoLtd or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MS Autotech CoLtd vs. ABCO Electronics Co
Performance |
| Timeline |
| MS Autotech CoLtd |
| ABCO Electronics |
MS Autotech and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MS Autotech and ABCO Electronics
The main advantage of trading using opposite MS Autotech and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MS Autotech position performs unexpectedly, ABCO 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' long position.| MS Autotech vs. LG Display | MS Autotech vs. Hyundai Motor | MS Autotech vs. Hyundai Motor Co | MS Autotech vs. Hyundai Motor Co |
| ABCO Electronics vs. Dongsin Engineering Construction | ABCO Electronics vs. Doosan Fuel Cell | ABCO Electronics vs. Daishin Balance 1 | ABCO 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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