Correlation Between Trk Corp and Aces Electronics
Can any of the company-specific risk be diversified away by investing in both Trk Corp and Aces Electronics 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 Trk Corp and Aces Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trk Corp and Aces Electronics Co, you can compare the effects of market volatilities on Trk Corp and Aces Electronics 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 Trk Corp with a short position of Aces Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trk Corp and Aces Electronics.
Diversification Opportunities for Trk Corp and Aces Electronics
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Trk and Aces is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Trk Corp and Aces Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aces Electronics and Trk Corp 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 Trk Corp are associated (or correlated) with Aces Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aces Electronics has no effect on the direction of Trk Corp i.e., Trk Corp and Aces Electronics go up and down completely randomly.
Pair Corralation between Trk Corp and Aces Electronics
Assuming the 90 days trading horizon Trk Corp is expected to generate 0.83 times more return on investment than Aces Electronics. However, Trk Corp is 1.21 times less risky than Aces Electronics. It trades about 0.02 of its potential returns per unit of risk. Aces Electronics Co is currently generating about -0.32 per unit of risk. If you would invest 1,995 in Trk Corp on October 12, 2024 and sell it today you would earn a total of 5.00 from holding Trk Corp or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trk Corp vs. Aces Electronics Co
Performance |
| Timeline |
| Trk Corp |
| Aces Electronics |
Trk Corp and Aces Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trk Corp and Aces Electronics
The main advantage of trading using opposite Trk Corp and Aces Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trk Corp position performs unexpectedly, Aces Electronics 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 Aces Electronics will offset losses from the drop in Aces Electronics' long position.| Trk Corp vs. Formosa Taffeta Co | Trk Corp vs. Tainan Spinning Co | Trk Corp vs. Carnival Industrial Corp | Trk Corp vs. Lily Textile Co |
| Aces Electronics vs. Chant Sincere Co | Aces Electronics vs. Altek Corp | Aces Electronics vs. Jentech Precision Industrial | Aces Electronics vs. Lotes 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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