Correlation Between Cub Elecparts and Excellence Optoelectronic
Can any of the company-specific risk be diversified away by investing in both Cub Elecparts and Excellence Optoelectronic 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 Cub Elecparts and Excellence Optoelectronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cub Elecparts and Excellence Optoelectronic, you can compare the effects of market volatilities on Cub Elecparts and Excellence Optoelectronic 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 Cub Elecparts with a short position of Excellence Optoelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cub Elecparts and Excellence Optoelectronic.
Diversification Opportunities for Cub Elecparts and Excellence Optoelectronic
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cub and Excellence is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cub Elecparts and Excellence Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellence Optoelectronic and Cub Elecparts 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 Cub Elecparts are associated (or correlated) with Excellence Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellence Optoelectronic has no effect on the direction of Cub Elecparts i.e., Cub Elecparts and Excellence Optoelectronic go up and down completely randomly.
Pair Corralation between Cub Elecparts and Excellence Optoelectronic
Assuming the 90 days trading horizon Cub Elecparts is expected to generate 1.95 times less return on investment than Excellence Optoelectronic. But when comparing it to its historical volatility, Cub Elecparts is 1.74 times less risky than Excellence Optoelectronic. It trades about 0.03 of its potential returns per unit of risk. Excellence Optoelectronic is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,890 in Excellence Optoelectronic on September 2, 2024 and sell it today you would earn a total of 50.00 from holding Excellence Optoelectronic or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cub Elecparts vs. Excellence Optoelectronic
Performance |
| Timeline |
| Cub Elecparts |
| Excellence Optoelectronic |
Cub Elecparts and Excellence Optoelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cub Elecparts and Excellence Optoelectronic
The main advantage of trading using opposite Cub Elecparts and Excellence Optoelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cub Elecparts position performs unexpectedly, Excellence Optoelectronic 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 Excellence Optoelectronic will offset losses from the drop in Excellence Optoelectronic's long position.| Cub Elecparts vs. Chaintech Technology Corp | Cub Elecparts vs. Avision | Cub Elecparts vs. Clevo Co | Cub Elecparts vs. Elitegroup Computer Systems |
| Excellence Optoelectronic vs. Hota Industrial Mfg | Excellence Optoelectronic vs. BizLink Holding | Excellence Optoelectronic vs. Tong Hsing Electronic | Excellence Optoelectronic vs. SDI Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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