Correlation Between Everlight Chemical and Basso Industry
Can any of the company-specific risk be diversified away by investing in both Everlight Chemical and Basso Industry 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 Everlight Chemical and Basso Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everlight Chemical Industrial and Basso Industry Corp, you can compare the effects of market volatilities on Everlight Chemical and Basso Industry 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 Everlight Chemical with a short position of Basso Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everlight Chemical and Basso Industry.
Diversification Opportunities for Everlight Chemical and Basso Industry
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Everlight and Basso is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Everlight Chemical Industrial and Basso Industry Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basso Industry Corp and Everlight Chemical 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 Everlight Chemical Industrial are associated (or correlated) with Basso Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basso Industry Corp has no effect on the direction of Everlight Chemical i.e., Everlight Chemical and Basso Industry go up and down completely randomly.
Pair Corralation between Everlight Chemical and Basso Industry
Assuming the 90 days trading horizon Everlight Chemical Industrial is expected to under-perform the Basso Industry. In addition to that, Everlight Chemical is 1.49 times more volatile than Basso Industry Corp. It trades about -0.2 of its total potential returns per unit of risk. Basso Industry Corp is currently generating about -0.05 per unit of volatility. If you would invest 4,330 in Basso Industry Corp on September 1, 2024 and sell it today you would lose (60.00) from holding Basso Industry Corp or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everlight Chemical Industrial vs. Basso Industry Corp
Performance |
| Timeline |
| Everlight Chemical |
| Basso Industry Corp |
Everlight Chemical and Basso Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everlight Chemical and Basso Industry
The main advantage of trading using opposite Everlight Chemical and Basso Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everlight Chemical position performs unexpectedly, Basso Industry 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 Basso Industry will offset losses from the drop in Basso Industry's long position.| Everlight Chemical vs. Basso Industry Corp | Everlight Chemical vs. Chung Hsin Electric Machinery | Everlight Chemical vs. TYC Brother Industrial | Everlight Chemical vs. TECO Electric Machinery |
| Basso Industry vs. Cheng Shin Rubber | Basso Industry vs. Kung Long Batteries | Basso Industry vs. Pou Chen Corp | Basso Industry vs. China Steel Chemical |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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