Correlation Between Allis Electric and BenQ Materials
Can any of the company-specific risk be diversified away by investing in both Allis Electric and BenQ Materials 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 BenQ Materials 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 BenQ Materials Corp, you can compare the effects of market volatilities on Allis Electric and BenQ Materials 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 BenQ Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allis Electric and BenQ Materials.
Diversification Opportunities for Allis Electric and BenQ Materials
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Allis and BenQ is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Allis Electric Co and BenQ Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Materials Corp 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 BenQ Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Materials Corp has no effect on the direction of Allis Electric i.e., Allis Electric and BenQ Materials go up and down completely randomly.
Pair Corralation between Allis Electric and BenQ Materials
Assuming the 90 days trading horizon Allis Electric Co is expected to generate 1.42 times more return on investment than BenQ Materials. However, Allis Electric is 1.42 times more volatile than BenQ Materials Corp. It trades about 0.03 of its potential returns per unit of risk. BenQ Materials Corp is currently generating about 0.02 per unit of risk. If you would invest 11,200 in Allis Electric Co on September 5, 2024 and sell it today you would earn a total of 100.00 from holding Allis Electric Co or generate 0.89% 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. BenQ Materials Corp
Performance |
| Timeline |
| Allis Electric |
| BenQ Materials Corp |
Allis Electric and BenQ Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allis Electric and BenQ Materials
The main advantage of trading using opposite Allis Electric and BenQ Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allis Electric position performs unexpectedly, BenQ Materials 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 BenQ Materials will offset losses from the drop in BenQ Materials' 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 |
| BenQ Materials vs. Taiwan Semiconductor Manufacturing | BenQ Materials vs. Yang Ming Marine | BenQ Materials vs. AU Optronics | BenQ Materials vs. Nan Ya Plastics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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