Correlation Between EV Advanced and MS Autotech
Can any of the company-specific risk be diversified away by investing in both EV Advanced and MS Autotech 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 EV Advanced and MS Autotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EV Advanced Material and MS Autotech CoLtd, you can compare the effects of market volatilities on EV Advanced and MS Autotech 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 EV Advanced with a short position of MS Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of EV Advanced and MS Autotech.
Diversification Opportunities for EV Advanced and MS Autotech
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 131400 and 123040 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EV Advanced Material and MS Autotech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MS Autotech CoLtd and EV Advanced 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 EV Advanced Material are associated (or correlated) with MS Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MS Autotech CoLtd has no effect on the direction of EV Advanced i.e., EV Advanced and MS Autotech go up and down completely randomly.
Pair Corralation between EV Advanced and MS Autotech
Assuming the 90 days trading horizon EV Advanced Material is expected to generate 1.67 times more return on investment than MS Autotech. However, EV Advanced is 1.67 times more volatile than MS Autotech CoLtd. It trades about -0.02 of its potential returns per unit of risk. MS Autotech CoLtd is currently generating about -0.28 per unit of risk. If you would invest 213,500 in EV Advanced Material on September 4, 2024 and sell it today you would lose (10,500) from holding EV Advanced Material or give up 4.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
EV Advanced Material vs. MS Autotech CoLtd
Performance |
Timeline |
EV Advanced Material |
MS Autotech CoLtd |
EV Advanced and MS Autotech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EV Advanced and MS Autotech
The main advantage of trading using opposite EV Advanced and MS Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EV Advanced position performs unexpectedly, MS Autotech 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 MS Autotech will offset losses from the drop in MS Autotech's long position.EV Advanced vs. PJ Metal Co | EV Advanced vs. Duksan Hi Metal | EV Advanced vs. Youngsin Metal Industrial | EV Advanced vs. Eagon Industrial Co |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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