Correlation Between Eternal Materials and Aker Technology
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Aker 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 Eternal Materials and Aker Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Aker Technology Co, you can compare the effects of market volatilities on Eternal Materials and Aker 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 Eternal Materials with a short position of Aker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Aker Technology.
Diversification Opportunities for Eternal Materials and Aker Technology
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eternal and Aker is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Aker Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Technology and Eternal Materials 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 Eternal Materials Co are associated (or correlated) with Aker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Technology has no effect on the direction of Eternal Materials i.e., Eternal Materials and Aker Technology go up and down completely randomly.
Pair Corralation between Eternal Materials and Aker Technology
Assuming the 90 days trading horizon Eternal Materials is expected to generate 3.42 times less return on investment than Aker Technology. But when comparing it to its historical volatility, Eternal Materials Co is 1.9 times less risky than Aker Technology. It trades about 0.01 of its potential returns per unit of risk. Aker Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,280 in Aker Technology Co on September 12, 2024 and sell it today you would earn a total of 250.00 from holding Aker Technology Co or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternal Materials Co vs. Aker Technology Co
Performance |
| Timeline |
| Eternal Materials |
| Aker Technology |
Eternal Materials and Aker Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Aker Technology
The main advantage of trading using opposite Eternal Materials and Aker Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Aker 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 Aker Technology will offset losses from the drop in Aker Technology's long position.| Eternal Materials vs. Tainan Spinning Co | Eternal Materials vs. Lealea Enterprise Co | Eternal Materials vs. China Petrochemical Development | Eternal Materials vs. Ruentex Development Co |
| Aker Technology vs. Eternal Materials Co | Aker Technology vs. Provision Information CoLtd | Aker Technology vs. Eagle Cold Storage | Aker Technology vs. Data International Co |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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