Correlation Between Allis Electric and P Duke
Can any of the company-specific risk be diversified away by investing in both Allis Electric and P Duke 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 P Duke 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 P Duke Technology Co, you can compare the effects of market volatilities on Allis Electric and P Duke 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 P Duke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allis Electric and P Duke.
Diversification Opportunities for Allis Electric and P Duke
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Allis and 8109 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Allis Electric Co and P Duke Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P Duke 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 P Duke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P Duke Technology has no effect on the direction of Allis Electric i.e., Allis Electric and P Duke go up and down completely randomly.
Pair Corralation between Allis Electric and P Duke
Assuming the 90 days trading horizon Allis Electric Co is expected to under-perform the P Duke. In addition to that, Allis Electric is 2.57 times more volatile than P Duke Technology Co. It trades about -0.2 of its total potential returns per unit of risk. P Duke Technology Co is currently generating about 0.2 per unit of volatility. If you would invest 8,760 in P Duke Technology Co on November 3, 2024 and sell it today you would earn a total of 470.00 from holding P Duke Technology Co or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allis Electric Co vs. P Duke Technology Co
Performance |
| Timeline |
| Allis Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| P Duke Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Allis Electric and P Duke Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allis Electric and P Duke
The main advantage of trading using opposite Allis Electric and P Duke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allis Electric position performs unexpectedly, P Duke 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 P Duke will offset losses from the drop in P Duke's long position.The idea behind Allis Electric Co and P Duke Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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