Correlation Between Top Material and Camus Engineering
Can any of the company-specific risk be diversified away by investing in both Top Material and Camus Engineering 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 Top Material and Camus Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and Camus Engineering Construction, you can compare the effects of market volatilities on Top Material and Camus Engineering 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 Top Material with a short position of Camus Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and Camus Engineering.
Diversification Opportunities for Top Material and Camus Engineering
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Top and Camus is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and Camus Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camus Engineering and Top Material 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 Top Material Co are associated (or correlated) with Camus Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camus Engineering has no effect on the direction of Top Material i.e., Top Material and Camus Engineering go up and down completely randomly.
Pair Corralation between Top Material and Camus Engineering
Assuming the 90 days trading horizon Top Material Co is expected to generate 2.06 times more return on investment than Camus Engineering. However, Top Material is 2.06 times more volatile than Camus Engineering Construction. It trades about 0.01 of its potential returns per unit of risk. Camus Engineering Construction is currently generating about -0.02 per unit of risk. If you would invest 3,407,018 in Top Material Co on October 26, 2024 and sell it today you would lose (647,018) from holding Top Material Co or give up 18.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. Camus Engineering Construction
Performance |
| Timeline |
| Top Material |
| Camus Engineering |
Top Material and Camus Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and Camus Engineering
The main advantage of trading using opposite Top Material and Camus Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material position performs unexpectedly, Camus Engineering 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 Camus Engineering will offset losses from the drop in Camus Engineering's long position.| Top Material vs. Samsung Electronics Co | Top Material vs. Samsung Electronics Co | Top Material vs. LG Energy Solution | Top Material vs. SK Hynix |
| Camus Engineering vs. Hyundai Green Food | Camus Engineering vs. Automobile Pc | Camus Engineering vs. Sam Yang Foods | Camus Engineering vs. GS Engineering Construction |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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