Correlation Between APro and Amogreentech CoLtd
Can any of the company-specific risk be diversified away by investing in both APro and Amogreentech CoLtd 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 APro and Amogreentech CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APro Co and Amogreentech CoLtd, you can compare the effects of market volatilities on APro and Amogreentech CoLtd 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 APro with a short position of Amogreentech CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of APro and Amogreentech CoLtd.
Diversification Opportunities for APro and Amogreentech CoLtd
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between APro and Amogreentech is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding APro Co and Amogreentech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amogreentech CoLtd and APro 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 APro Co are associated (or correlated) with Amogreentech CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amogreentech CoLtd has no effect on the direction of APro i.e., APro and Amogreentech CoLtd go up and down completely randomly.
Pair Corralation between APro and Amogreentech CoLtd
Assuming the 90 days trading horizon APro Co is expected to under-perform the Amogreentech CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, APro Co is 1.24 times less risky than Amogreentech CoLtd. The stock trades about -0.16 of its potential returns per unit of risk. The Amogreentech CoLtd is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,280,000 in Amogreentech CoLtd on August 25, 2024 and sell it today you would lose (625,000) from holding Amogreentech CoLtd or give up 48.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APro Co vs. Amogreentech CoLtd
Performance |
| Timeline |
| APro |
| Amogreentech CoLtd |
APro and Amogreentech CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APro and Amogreentech CoLtd
The main advantage of trading using opposite APro and Amogreentech CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APro position performs unexpectedly, Amogreentech CoLtd 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 Amogreentech CoLtd will offset losses from the drop in Amogreentech CoLtd's long position.| APro vs. DAEDUCK ELECTRONICS CoLtd | APro vs. Air Busan Co | APro vs. Samji Electronics Co | APro vs. Sungmoon Electronics Co |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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