Correlation Between Allis Electric and Klingon Aerospace
Can any of the company-specific risk be diversified away by investing in both Allis Electric and Klingon Aerospace 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 Allis Electric and Klingon Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allis Electric Co and Klingon Aerospace, you can compare the effects of market volatilities on Allis Electric and Klingon Aerospace 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 Allis Electric with a short position of Klingon Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allis Electric and Klingon Aerospace.
Diversification Opportunities for Allis Electric and Klingon Aerospace
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Allis and Klingon is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Allis Electric Co and Klingon Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klingon Aerospace and Allis Electric 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 Allis Electric Co are associated (or correlated) with Klingon Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klingon Aerospace has no effect on the direction of Allis Electric i.e., Allis Electric and Klingon Aerospace go up and down completely randomly.
Pair Corralation between Allis Electric and Klingon Aerospace
Assuming the 90 days trading horizon Allis Electric Co is expected to generate 1.17 times more return on investment than Klingon Aerospace. However, Allis Electric is 1.17 times more volatile than Klingon Aerospace. It trades about 0.08 of its potential returns per unit of risk. Klingon Aerospace is currently generating about 0.01 per unit of risk. If you would invest 3,270 in Allis Electric Co on October 25, 2024 and sell it today you would earn a total of 6,560 from holding Allis Electric Co or generate 200.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allis Electric Co vs. Klingon Aerospace
Performance |
| Timeline |
| Allis Electric |
| Klingon Aerospace |
Allis Electric and Klingon Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allis Electric and Klingon Aerospace
The main advantage of trading using opposite Allis Electric and Klingon Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allis Electric position performs unexpectedly, Klingon Aerospace 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 Klingon Aerospace will offset losses from the drop in Klingon Aerospace's long position.| Allis Electric vs. Chung Hsin Electric Machinery | Allis Electric vs. Fortune Electric Co | Allis Electric vs. TECO Electric Machinery | Allis Electric vs. Shihlin Electric Engineering |
| Klingon Aerospace vs. Anderson Industrial Corp | Klingon Aerospace vs. Rexon Industrial Corp | Klingon Aerospace vs. Lee Chi Enterprises | Klingon Aerospace vs. Allis Electric 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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