Correlation Between Min Aik and Information Technology
Can any of the company-specific risk be diversified away by investing in both Min Aik and Information 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 Min Aik and Information Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Min Aik Technology and Information Technology Total, you can compare the effects of market volatilities on Min Aik and Information 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 Min Aik with a short position of Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Information Technology.
Diversification Opportunities for Min Aik and Information Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Min and Information is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology and Min Aik 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 Min Aik Technology are associated (or correlated) with Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Min Aik i.e., Min Aik and Information Technology go up and down completely randomly.
Pair Corralation between Min Aik and Information Technology
Assuming the 90 days trading horizon Min Aik Technology is expected to under-perform the Information Technology. In addition to that, Min Aik is 1.03 times more volatile than Information Technology Total. It trades about -0.11 of its total potential returns per unit of risk. Information Technology Total is currently generating about 0.01 per unit of volatility. If you would invest 4,725 in Information Technology Total on November 6, 2024 and sell it today you would lose (5.00) from holding Information Technology Total or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Min Aik Technology vs. Information Technology Total
Performance |
| Timeline |
| Min Aik Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Information Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Min Aik and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Min Aik and Information Technology
The main advantage of trading using opposite Min Aik and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Min Aik position performs unexpectedly, Information 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 Information Technology will offset losses from the drop in Information Technology's long position.The idea behind Min Aik Technology and Information Technology Total pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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