Correlation Between Aerospace Industrial and Aker Technology
Can any of the company-specific risk be diversified away by investing in both Aerospace Industrial 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 Aerospace Industrial and Aker Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerospace Industrial Development and Aker Technology Co, you can compare the effects of market volatilities on Aerospace Industrial 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 Aerospace Industrial with a short position of Aker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerospace Industrial and Aker Technology.
Diversification Opportunities for Aerospace Industrial and Aker Technology
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aerospace and Aker is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aerospace Industrial Developme and Aker Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Technology and Aerospace Industrial 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 Aerospace Industrial Development 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 Aerospace Industrial i.e., Aerospace Industrial and Aker Technology go up and down completely randomly.
Pair Corralation between Aerospace Industrial and Aker Technology
Assuming the 90 days trading horizon Aerospace Industrial Development is expected to generate 0.29 times more return on investment than Aker Technology. However, Aerospace Industrial Development is 3.49 times less risky than Aker Technology. It trades about 0.13 of its potential returns per unit of risk. Aker Technology Co is currently generating about -0.13 per unit of risk. If you would invest 4,305 in Aerospace Industrial Development on October 30, 2024 and sell it today you would earn a total of 235.00 from holding Aerospace Industrial Development or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerospace Industrial Developme vs. Aker Technology Co
Performance |
| Timeline |
| Aerospace Industrial |
| Aker Technology |
Aerospace Industrial and Aker Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerospace Industrial and Aker Technology
The main advantage of trading using opposite Aerospace Industrial and Aker Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerospace Industrial 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.| Aerospace Industrial vs. CSBC Corp Taiwan | Aerospace Industrial vs. Eva Airways Corp | Aerospace Industrial vs. Taiwan High Speed | Aerospace Industrial vs. China Airlines |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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