Correlation Between Edison Opto and Powertech Industrial
Can any of the company-specific risk be diversified away by investing in both Edison Opto and Powertech Industrial 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 Edison Opto and Powertech Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison Opto Corp and Powertech Industrial Co, you can compare the effects of market volatilities on Edison Opto and Powertech Industrial 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 Edison Opto with a short position of Powertech Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison Opto and Powertech Industrial.
Diversification Opportunities for Edison Opto and Powertech Industrial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Edison and Powertech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edison Opto Corp and Powertech Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Industrial and Edison Opto 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 Edison Opto Corp are associated (or correlated) with Powertech Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Industrial has no effect on the direction of Edison Opto i.e., Edison Opto and Powertech Industrial go up and down completely randomly.
Pair Corralation between Edison Opto and Powertech Industrial
Assuming the 90 days trading horizon Edison Opto Corp is expected to under-perform the Powertech Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Edison Opto Corp is 2.28 times less risky than Powertech Industrial. The stock trades about -0.22 of its potential returns per unit of risk. The Powertech Industrial Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. 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 |
Edison Opto Corp vs. Powertech Industrial Co
Performance |
| Timeline |
| Edison Opto Corp |
| Powertech Industrial |
Edison Opto and Powertech Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edison Opto and Powertech Industrial
The main advantage of trading using opposite Edison Opto and Powertech Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison Opto position performs unexpectedly, Powertech Industrial 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 Powertech Industrial will offset losses from the drop in Powertech Industrial's long position.| Edison Opto vs. Everlight Electronics Co | Edison Opto vs. Bright Led Electronics | Edison Opto vs. Harvatek Corp | Edison Opto vs. United Renewable Energy |
| Powertech Industrial vs. Leader Electronics | Powertech Industrial vs. Darwin Precisions Corp | Powertech Industrial vs. Silitech Technology Corp | Powertech Industrial vs. Altek 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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