Correlation Between Reward Wool and Baotek Industrial
Can any of the company-specific risk be diversified away by investing in both Reward Wool and Baotek Industrial 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 Baotek Industrial 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 Baotek Industrial Materials, you can compare the effects of market volatilities on Reward Wool and Baotek Industrial 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 Baotek Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reward Wool and Baotek Industrial.
Diversification Opportunities for Reward Wool and Baotek Industrial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reward and Baotek is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Reward Wool Industry and Baotek Industrial Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baotek Industrial 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 Baotek Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baotek Industrial has no effect on the direction of Reward Wool i.e., Reward Wool and Baotek Industrial go up and down completely randomly.
Pair Corralation between Reward Wool and Baotek Industrial
Assuming the 90 days trading horizon Reward Wool Industry is expected to under-perform the Baotek Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Reward Wool Industry is 3.58 times less risky than Baotek Industrial. The stock trades about -0.36 of its potential returns per unit of risk. The Baotek Industrial Materials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,320 in Baotek Industrial Materials on August 28, 2024 and sell it today you would earn a total of 315.00 from holding Baotek Industrial Materials or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reward Wool Industry vs. Baotek Industrial Materials
Performance |
| Timeline |
| Reward Wool Industry |
| Baotek Industrial |
Reward Wool and Baotek Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reward Wool and Baotek Industrial
The main advantage of trading using opposite Reward Wool and Baotek Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reward Wool position performs unexpectedly, Baotek Industrial 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 Baotek Industrial will offset losses from the drop in Baotek Industrial'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 |
| Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Tainan Spinning Co | Baotek Industrial vs. Shinkong Synthetic Fiber |
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 CEOs Directory module to screen CEOs from public companies around the world.
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