Correlation Between Powertech Industrial and Edison Opto
Can any of the company-specific risk be diversified away by investing in both Powertech Industrial and Edison Opto 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 Powertech Industrial and Edison Opto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Industrial Co and Edison Opto Corp, you can compare the effects of market volatilities on Powertech Industrial and Edison Opto 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 Powertech Industrial with a short position of Edison Opto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Industrial and Edison Opto.
Diversification Opportunities for Powertech Industrial and Edison Opto
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Powertech and Edison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and Edison Opto Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison Opto Corp and Powertech 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 Powertech Industrial Co are associated (or correlated) with Edison Opto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison Opto Corp has no effect on the direction of Powertech Industrial i.e., Powertech Industrial and Edison Opto go up and down completely randomly.
Pair Corralation between Powertech Industrial and Edison Opto
Assuming the 90 days trading horizon Powertech Industrial Co is expected to generate 2.28 times more return on investment than Edison Opto. However, Powertech Industrial is 2.28 times more volatile than Edison Opto Corp. It trades about -0.04 of its potential returns per unit of risk. Edison Opto Corp is currently generating about -0.22 per unit of risk. If you would invest 3,135 in Powertech Industrial Co on October 11, 2024 and sell it today you would lose (185.00) from holding Powertech Industrial Co or give up 5.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powertech Industrial Co vs. Edison Opto Corp
Performance |
| Timeline |
| Powertech Industrial |
| Edison Opto Corp |
Powertech Industrial and Edison Opto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Industrial and Edison Opto
The main advantage of trading using opposite Powertech Industrial and Edison Opto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Industrial position performs unexpectedly, Edison Opto 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 Edison Opto will offset losses from the drop in Edison Opto's long position.| Powertech Industrial vs. Leader Electronics | Powertech Industrial vs. Darwin Precisions Corp | Powertech Industrial vs. Silitech Technology Corp | Powertech Industrial vs. Altek Corp |
| Edison Opto vs. Everlight Electronics Co | Edison Opto vs. Bright Led Electronics | Edison Opto vs. Harvatek Corp | Edison Opto vs. United Renewable Energy |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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