Correlation Between ALFORMER Industrial and Victory New
Can any of the company-specific risk be diversified away by investing in both ALFORMER Industrial and Victory New 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 ALFORMER Industrial and Victory New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALFORMER Industrial Co and Victory New Materials, you can compare the effects of market volatilities on ALFORMER Industrial and Victory New 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 ALFORMER Industrial with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALFORMER Industrial and Victory New.
Diversification Opportunities for ALFORMER Industrial and Victory New
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ALFORMER and Victory is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ALFORMER Industrial Co and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and ALFORMER 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 ALFORMER Industrial Co are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of ALFORMER Industrial i.e., ALFORMER Industrial and Victory New go up and down completely randomly.
Pair Corralation between ALFORMER Industrial and Victory New
Assuming the 90 days trading horizon ALFORMER Industrial Co is expected to generate 1.98 times more return on investment than Victory New. However, ALFORMER Industrial is 1.98 times more volatile than Victory New Materials. It trades about 0.04 of its potential returns per unit of risk. Victory New Materials is currently generating about -0.02 per unit of risk. If you would invest 2,248 in ALFORMER Industrial Co on November 19, 2024 and sell it today you would earn a total of 1,082 from holding ALFORMER Industrial Co or generate 48.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
ALFORMER Industrial Co vs. Victory New Materials
Performance |
| Timeline |
| ALFORMER Industrial |
| Victory New Materials |
ALFORMER Industrial and Victory New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALFORMER Industrial and Victory New
The main advantage of trading using opposite ALFORMER Industrial and Victory New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALFORMER Industrial position performs unexpectedly, Victory New 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 Victory New will offset losses from the drop in Victory New's long position.| ALFORMER Industrial vs. Tsang Yow Industrial | ALFORMER Industrial vs. Professional Computer Technology | ALFORMER Industrial vs. Space Shuttle Hi Tech | ALFORMER Industrial vs. Kworld Computer Co |
| Victory New vs. Jinli Group Holdings | Victory New vs. New Palace International | Victory New vs. Les Enphants Co | Victory New vs. Shin Shin Co |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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