Correlation Between Amogreentech and RF Materials
Can any of the company-specific risk be diversified away by investing in both Amogreentech and RF Materials 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 Amogreentech and RF Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amogreentech Co and RF Materials Co, you can compare the effects of market volatilities on Amogreentech and RF Materials 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 Amogreentech with a short position of RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amogreentech and RF Materials.
Diversification Opportunities for Amogreentech and RF Materials
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amogreentech and 327260 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amogreentech Co and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials and Amogreentech 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 Amogreentech Co are associated (or correlated) with RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Amogreentech i.e., Amogreentech and RF Materials go up and down completely randomly.
Pair Corralation between Amogreentech and RF Materials
Assuming the 90 days trading horizon Amogreentech Co is expected to generate 0.81 times more return on investment than RF Materials. However, Amogreentech Co is 1.23 times less risky than RF Materials. It trades about -0.06 of its potential returns per unit of risk. RF Materials Co is currently generating about -0.2 per unit of risk. If you would invest 709,000 in Amogreentech Co on August 29, 2024 and sell it today you would lose (42,000) from holding Amogreentech Co or give up 5.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amogreentech Co vs. RF Materials Co
Performance |
| Timeline |
| Amogreentech |
| RF Materials |
Amogreentech and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amogreentech and RF Materials
The main advantage of trading using opposite Amogreentech and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amogreentech position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' long position.The idea behind Amogreentech Co and RF Materials Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| RF Materials vs. SK Hynix | RF Materials vs. People Technology | RF Materials vs. SIMMTECH Co | RF Materials vs. Haesung DS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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