Correlation Between Solution Advanced and AeroSpace Technology
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and AeroSpace 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 Solution Advanced and AeroSpace Technology 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 AeroSpace Technology of, you can compare the effects of market volatilities on Solution Advanced and AeroSpace 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 Solution Advanced with a short position of AeroSpace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and AeroSpace Technology.
Diversification Opportunities for Solution Advanced and AeroSpace Technology
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solution and AeroSpace is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and AeroSpace Technology of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroSpace Technology 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 AeroSpace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroSpace Technology has no effect on the direction of Solution Advanced i.e., Solution Advanced and AeroSpace Technology go up and down completely randomly.
Pair Corralation between Solution Advanced and AeroSpace Technology
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.63 times more return on investment than AeroSpace Technology. However, Solution Advanced is 1.63 times more volatile than AeroSpace Technology of. It trades about 0.09 of its potential returns per unit of risk. AeroSpace Technology of is currently generating about -0.12 per unit of risk. If you would invest 136,900 in Solution Advanced Technology on September 13, 2024 and sell it today you would earn a total of 8,100 from holding Solution Advanced Technology or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. AeroSpace Technology of
Performance |
| Timeline |
| Solution Advanced |
| AeroSpace Technology |
Solution Advanced and AeroSpace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and AeroSpace Technology
The main advantage of trading using opposite Solution Advanced and AeroSpace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, AeroSpace 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 AeroSpace Technology will offset losses from the drop in AeroSpace Technology'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 |
| AeroSpace Technology vs. Korea New Network | AeroSpace Technology vs. Solution Advanced Technology | AeroSpace Technology vs. Busan Industrial Co | AeroSpace Technology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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