Correlation Between Reward Wool and Connection Technology
Can any of the company-specific risk be diversified away by investing in both Reward Wool and Connection Technology 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 Reward Wool and Connection Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reward Wool Industry and Connection Technology Systems, you can compare the effects of market volatilities on Reward Wool and Connection Technology 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 Reward Wool with a short position of Connection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reward Wool and Connection Technology.
Diversification Opportunities for Reward Wool and Connection Technology
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reward and Connection is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Reward Wool Industry and Connection Technology Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connection Technology and Reward Wool 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 Reward Wool Industry are associated (or correlated) with Connection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connection Technology has no effect on the direction of Reward Wool i.e., Reward Wool and Connection Technology go up and down completely randomly.
Pair Corralation between Reward Wool and Connection Technology
Assuming the 90 days trading horizon Reward Wool Industry is expected to generate 0.65 times more return on investment than Connection Technology. However, Reward Wool Industry is 1.53 times less risky than Connection Technology. It trades about 0.08 of its potential returns per unit of risk. Connection Technology Systems is currently generating about 0.0 per unit of risk. If you would invest 2,365 in Reward Wool Industry on September 12, 2024 and sell it today you would earn a total of 1,330 from holding Reward Wool Industry or generate 56.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reward Wool Industry vs. Connection Technology Systems
Performance |
| Timeline |
| Reward Wool Industry |
| Connection Technology |
Reward Wool and Connection Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reward Wool and Connection Technology
The main advantage of trading using opposite Reward Wool and Connection Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reward Wool position performs unexpectedly, Connection Technology 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 Connection Technology will offset losses from the drop in Connection Technology's long position.| Reward Wool vs. Tung Ho Textile | Reward Wool vs. Carnival Industrial Corp | Reward Wool vs. Yi Jinn Industrial | Reward Wool vs. Tah Tong Textile |
| Connection Technology vs. Simple Mart Retail | Connection Technology vs. Chernan Metal Industrial | Connection Technology vs. Asia Metal Industries | Connection Technology vs. Chi Sheng Chemical |
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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