Correlation Between Ardentec and Para Light
Can any of the company-specific risk be diversified away by investing in both Ardentec and Para Light 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 Ardentec and Para Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ardentec and Para Light Electronics, you can compare the effects of market volatilities on Ardentec and Para Light 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 Ardentec with a short position of Para Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardentec and Para Light.
Diversification Opportunities for Ardentec and Para Light
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ardentec and Para is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ardentec and Para Light Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Para Light Electronics and Ardentec 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 Ardentec are associated (or correlated) with Para Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Para Light Electronics has no effect on the direction of Ardentec i.e., Ardentec and Para Light go up and down completely randomly.
Pair Corralation between Ardentec and Para Light
Assuming the 90 days trading horizon Ardentec is expected to generate 2.17 times more return on investment than Para Light. However, Ardentec is 2.17 times more volatile than Para Light Electronics. It trades about 0.11 of its potential returns per unit of risk. Para Light Electronics is currently generating about -0.26 per unit of risk. If you would invest 5,440 in Ardentec on October 9, 2024 and sell it today you would earn a total of 320.00 from holding Ardentec or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ardentec vs. Para Light Electronics
Performance |
| Timeline |
| Ardentec |
| Para Light Electronics |
Ardentec and Para Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ardentec and Para Light
The main advantage of trading using opposite Ardentec and Para Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardentec position performs unexpectedly, Para Light 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 Para Light will offset losses from the drop in Para Light's long position.| Ardentec vs. WT Microelectronics Co | Ardentec vs. Lien Chang Electronic | Ardentec vs. Camellia Metal Co | Ardentec vs. Compal Electronics |
| Para Light vs. Holy Stone Enterprise | Para Light vs. Walsin Technology Corp | Para Light vs. Yageo Corp | Para Light vs. HannStar Board 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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