Correlation Between Solution Advanced and Automobile
Can any of the company-specific risk be diversified away by investing in both Solution Advanced 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 Solution Advanced and Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Automobile Pc, you can compare the effects of market volatilities on Solution Advanced 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 Solution Advanced with a short position of Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Automobile.
Diversification Opportunities for Solution Advanced and Automobile
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solution and Automobile is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc and Solution Advanced 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 Solution Advanced Technology 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 Solution Advanced i.e., Solution Advanced and Automobile go up and down completely randomly.
Pair Corralation between Solution Advanced and Automobile
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.07 times more return on investment than Automobile. However, Solution Advanced is 1.07 times more volatile than Automobile Pc. It trades about -0.03 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.05 per unit of risk. If you would invest 295,782 in Solution Advanced Technology on September 12, 2024 and sell it today you would lose (150,982) from holding Solution Advanced Technology or give up 51.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Automobile Pc
Performance |
| Timeline |
| Solution Advanced |
| Automobile Pc |
Solution Advanced and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Automobile
The main advantage of trading using opposite Solution Advanced and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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