Correlation Between SV Investment and Automobile
Can any of the company-specific risk be diversified away by investing in both SV Investment and Automobile 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 SV Investment and Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SV Investment and Automobile Pc, you can compare the effects of market volatilities on SV Investment and Automobile 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 SV Investment with a short position of Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of SV Investment and Automobile.
Diversification Opportunities for SV Investment and Automobile
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 289080 and Automobile is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SV Investment and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc and SV Investment 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 SV Investment are associated (or correlated) with Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of SV Investment i.e., SV Investment and Automobile go up and down completely randomly.
Pair Corralation between SV Investment and Automobile
Assuming the 90 days trading horizon SV Investment is expected to generate 0.86 times more return on investment than Automobile. However, SV Investment is 1.16 times less risky than Automobile. It trades about -0.03 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.08 per unit of risk. If you would invest 189,925 in SV Investment on September 12, 2024 and sell it today you would lose (67,325) from holding SV Investment or give up 35.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SV Investment vs. Automobile Pc
Performance |
| Timeline |
| SV Investment |
| Automobile Pc |
SV Investment and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SV Investment and Automobile
The main advantage of trading using opposite SV Investment and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SV Investment position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| SV Investment vs. Daou Data Corp | SV Investment vs. Aju IB Investment | SV Investment vs. EBEST Investment Securities | SV Investment vs. Atinum Investment Co |
| Automobile vs. Daou Data Corp | Automobile vs. Solution Advanced Technology | Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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