Correlation Between Microelectronics and Cameo Communications
Can any of the company-specific risk be diversified away by investing in both Microelectronics and Cameo Communications 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 Microelectronics and Cameo Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microelectronics Technology and Cameo Communications, you can compare the effects of market volatilities on Microelectronics and Cameo Communications 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 Microelectronics with a short position of Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and Cameo Communications.
Diversification Opportunities for Microelectronics and Cameo Communications
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microelectronics and Cameo is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications and Microelectronics 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 Microelectronics Technology are associated (or correlated) with Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Microelectronics i.e., Microelectronics and Cameo Communications go up and down completely randomly.
Pair Corralation between Microelectronics and Cameo Communications
Assuming the 90 days trading horizon Microelectronics Technology is expected to generate 0.98 times more return on investment than Cameo Communications. However, Microelectronics Technology is 1.03 times less risky than Cameo Communications. It trades about 0.09 of its potential returns per unit of risk. Cameo Communications is currently generating about -0.06 per unit of risk. If you would invest 3,220 in Microelectronics Technology on October 26, 2024 and sell it today you would earn a total of 355.00 from holding Microelectronics Technology or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microelectronics Technology vs. Cameo Communications
Performance |
| Timeline |
| Microelectronics Tec |
| Cameo Communications |
Microelectronics and Cameo Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microelectronics and Cameo Communications
The main advantage of trading using opposite Microelectronics and Cameo Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microelectronics position performs unexpectedly, Cameo Communications 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 Cameo Communications will offset losses from the drop in Cameo Communications' long position.| Microelectronics vs. Unimicron Technology Corp | Microelectronics vs. Kinsus Interconnect Technology | Microelectronics vs. Novatek Microelectronics Corp | Microelectronics vs. Delta Electronics |
| Cameo Communications vs. Gemtek Technology Co | Cameo Communications vs. CyberTAN Technology | Cameo Communications vs. Alpha Networks | Cameo Communications vs. D Link 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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