Correlation Between Victory New and Eternal Materials
Can any of the company-specific risk be diversified away by investing in both Victory New and Eternal 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 Victory New and Eternal Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory New Materials and Eternal Materials Co, you can compare the effects of market volatilities on Victory New and Eternal 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 Victory New with a short position of Eternal Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Eternal Materials.
Diversification Opportunities for Victory New and Eternal Materials
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Victory and Eternal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Eternal Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Materials and Victory New 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 Victory New Materials are associated (or correlated) with Eternal Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Materials has no effect on the direction of Victory New i.e., Victory New and Eternal Materials go up and down completely randomly.
Pair Corralation between Victory New and Eternal Materials
Assuming the 90 days trading horizon Victory New Materials is expected to under-perform the Eternal Materials. In addition to that, Victory New is 1.07 times more volatile than Eternal Materials Co. It trades about -0.02 of its total potential returns per unit of risk. Eternal Materials Co is currently generating about -0.01 per unit of volatility. If you would invest 3,205 in Eternal Materials Co on November 19, 2024 and sell it today you would lose (305.00) from holding Eternal Materials Co or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory New Materials vs. Eternal Materials Co
Performance |
| Timeline |
| Victory New Materials |
| Eternal Materials |
Victory New and Eternal Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory New and Eternal Materials
The main advantage of trading using opposite Victory New and Eternal Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory New position performs unexpectedly, Eternal 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 Eternal Materials will offset losses from the drop in Eternal Materials' long position.| Victory New vs. Jinli Group Holdings | Victory New vs. New Palace International | Victory New vs. Les Enphants Co | Victory New vs. Shin Shin Co |
| Eternal Materials vs. Taiwan Fertilizer Co | Eternal Materials vs. Nan Ya Plastics | Eternal Materials vs. Formosa Chemicals Fibre | Eternal Materials vs. Far Eastern New |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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