Correlation Between Allis Electric and Simplo Technology
Can any of the company-specific risk be diversified away by investing in both Allis Electric and Simplo 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 Allis Electric and Simplo Technology 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 Simplo Technology Co, you can compare the effects of market volatilities on Allis Electric and Simplo 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 Allis Electric with a short position of Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allis Electric and Simplo Technology.
Diversification Opportunities for Allis Electric and Simplo Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Allis and Simplo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Allis Electric Co and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of Allis Electric i.e., Allis Electric and Simplo Technology go up and down completely randomly.
Pair Corralation between Allis Electric and Simplo Technology
Assuming the 90 days trading horizon Allis Electric is expected to generate 16.45 times less return on investment than Simplo Technology. But when comparing it to its historical volatility, Allis Electric Co is 1.23 times less risky than Simplo Technology. It trades about 0.01 of its potential returns per unit of risk. Simplo Technology Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 34,650 in Simplo Technology Co on August 29, 2024 and sell it today you would earn a total of 3,000 from holding Simplo Technology Co or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allis Electric Co vs. Simplo Technology Co
Performance |
| Timeline |
| Allis Electric |
| Simplo Technology |
Allis Electric and Simplo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allis Electric and Simplo Technology
The main advantage of trading using opposite Allis Electric and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allis Electric position performs unexpectedly, Simplo 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 Simplo Technology will offset losses from the drop in Simplo Technology's long position.| Allis Electric vs. Yulon Motor Co | Allis Electric vs. Far Eastern Department | Allis Electric vs. China Steel Corp | Allis Electric vs. Chang Hwa Commercial |
| Simplo Technology vs. Dynapack International Technology | Simplo Technology vs. Catcher Technology Co | Simplo Technology vs. Delta Electronics | Simplo Technology vs. Powertech Technology |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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