Correlation Between Mayer Steel and Acer E
Can any of the company-specific risk be diversified away by investing in both Mayer Steel and Acer E 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 Mayer Steel and Acer E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayer Steel Pipe and Acer E Enabling Service, you can compare the effects of market volatilities on Mayer Steel and Acer E 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 Mayer Steel with a short position of Acer E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayer Steel and Acer E.
Diversification Opportunities for Mayer Steel and Acer E
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mayer and Acer is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mayer Steel Pipe and Acer E Enabling Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer E Enabling and Mayer Steel 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 Mayer Steel Pipe are associated (or correlated) with Acer E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer E Enabling has no effect on the direction of Mayer Steel i.e., Mayer Steel and Acer E go up and down completely randomly.
Pair Corralation between Mayer Steel and Acer E
Assuming the 90 days trading horizon Mayer Steel Pipe is expected to generate 0.39 times more return on investment than Acer E. However, Mayer Steel Pipe is 2.54 times less risky than Acer E. It trades about 0.12 of its potential returns per unit of risk. Acer E Enabling Service is currently generating about 0.04 per unit of risk. If you would invest 2,780 in Mayer Steel Pipe on November 7, 2024 and sell it today you would earn a total of 55.00 from holding Mayer Steel Pipe or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mayer Steel Pipe vs. Acer E Enabling Service
Performance |
| Timeline |
| Mayer Steel Pipe |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Acer E Enabling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Mayer Steel and Acer E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mayer Steel and Acer E
The main advantage of trading using opposite Mayer Steel and Acer E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayer Steel position performs unexpectedly, Acer E 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 Acer E will offset losses from the drop in Acer E's long position.The idea behind Mayer Steel Pipe and Acer E Enabling Service 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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