Correlation Between Action Electronics and CyberTAN Technology
Can any of the company-specific risk be diversified away by investing in both Action Electronics and CyberTAN 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 Action Electronics and CyberTAN Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Action Electronics Co and CyberTAN Technology, you can compare the effects of market volatilities on Action Electronics and CyberTAN 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 Action Electronics with a short position of CyberTAN Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Action Electronics and CyberTAN Technology.
Diversification Opportunities for Action Electronics and CyberTAN Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Action and CyberTAN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Action Electronics Co and CyberTAN Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberTAN Technology and Action Electronics 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 Action Electronics Co are associated (or correlated) with CyberTAN Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberTAN Technology has no effect on the direction of Action Electronics i.e., Action Electronics and CyberTAN Technology go up and down completely randomly.
Pair Corralation between Action Electronics and CyberTAN Technology
Assuming the 90 days trading horizon Action Electronics Co is expected to under-perform the CyberTAN Technology. But the stock apears to be less risky and, when comparing its historical volatility, Action Electronics Co is 1.39 times less risky than CyberTAN Technology. The stock trades about -0.04 of its potential returns per unit of risk. The CyberTAN Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,470 in CyberTAN Technology on November 28, 2024 and sell it today you would lose (260.00) from holding CyberTAN Technology or give up 7.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Action Electronics Co vs. CyberTAN Technology
Performance |
| Timeline |
| Action Electronics |
| CyberTAN Technology |
Action Electronics and CyberTAN Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Action Electronics and CyberTAN Technology
The main advantage of trading using opposite Action Electronics and CyberTAN Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Action Electronics position performs unexpectedly, CyberTAN 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 CyberTAN Technology will offset losses from the drop in CyberTAN Technology's long position.| Action Electronics vs. Amtran Technology Co | Action Electronics vs. Asia Optical Co | Action Electronics vs. Emerging Display Technologies | Action Electronics vs. Bright Led Electronics |
| CyberTAN Technology vs. Gemtek Technology Co | CyberTAN Technology vs. Alpha Networks | CyberTAN Technology vs. Pan International Industrial Corp | CyberTAN Technology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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