Correlation Between Basso Industry and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Basso Industry and Allis Electric 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 Basso Industry and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basso Industry Corp and Allis Electric Co, you can compare the effects of market volatilities on Basso Industry and Allis Electric 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 Basso Industry with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basso Industry and Allis Electric.
Diversification Opportunities for Basso Industry and Allis Electric
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Basso and Allis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Basso Industry Corp and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and Basso Industry 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 Basso Industry Corp are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Basso Industry i.e., Basso Industry and Allis Electric go up and down completely randomly.
Pair Corralation between Basso Industry and Allis Electric
Assuming the 90 days trading horizon Basso Industry Corp is expected to generate 0.39 times more return on investment than Allis Electric. However, Basso Industry Corp is 2.59 times less risky than Allis Electric. It trades about 0.08 of its potential returns per unit of risk. Allis Electric Co is currently generating about -0.15 per unit of risk. If you would invest 4,335 in Basso Industry Corp on September 13, 2024 and sell it today you would earn a total of 65.00 from holding Basso Industry Corp or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basso Industry Corp vs. Allis Electric Co
Performance |
| Timeline |
| Basso Industry Corp |
| Allis Electric |
Basso Industry and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basso Industry and Allis Electric
The main advantage of trading using opposite Basso Industry and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basso Industry position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Basso Industry vs. Feng Tay Enterprises | Basso Industry vs. Ruentex Development Co | Basso Industry vs. WiseChip Semiconductor | Basso Industry vs. Novatek Microelectronics Corp |
| 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 |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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