Correlation Between Alton Sports and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both Alton Sports and Oriental Precision 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 Alton Sports and Oriental Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and Oriental Precision Engineering, you can compare the effects of market volatilities on Alton Sports and Oriental Precision 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 Alton Sports with a short position of Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Oriental Precision.
Diversification Opportunities for Alton Sports and Oriental Precision
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alton and Oriental is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision and Alton Sports 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 Alton Sports CoLtd are associated (or correlated) with Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of Alton Sports i.e., Alton Sports and Oriental Precision go up and down completely randomly.
Pair Corralation between Alton Sports and Oriental Precision
Assuming the 90 days trading horizon Alton Sports CoLtd is expected to under-perform the Oriental Precision. But the stock apears to be less risky and, when comparing its historical volatility, Alton Sports CoLtd is 1.2 times less risky than Oriental Precision. The stock trades about -0.08 of its potential returns per unit of risk. The Oriental Precision Engineering is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 238,919 in Oriental Precision Engineering on October 14, 2024 and sell it today you would earn a total of 315,081 from holding Oriental Precision Engineering or generate 131.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alton Sports CoLtd vs. Oriental Precision Engineering
Performance |
| Timeline |
| Alton Sports CoLtd |
| Oriental Precision |
Alton Sports and Oriental Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alton Sports and Oriental Precision
The main advantage of trading using opposite Alton Sports and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.| Alton Sports vs. Eagle Veterinary Technology | Alton Sports vs. KMH Hitech Co | Alton Sports vs. Polaris Office Corp | Alton Sports vs. Sewoon Medical Co |
| Oriental Precision vs. Alton Sports CoLtd | Oriental Precision vs. LS Materials | Oriental Precision vs. INNOX Advanced Materials | Oriental Precision vs. RF Materials 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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