Correlation Between Rich Development and XAC Automation
Can any of the company-specific risk be diversified away by investing in both Rich Development and XAC Automation 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 Rich Development and XAC Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rich Development Co and XAC Automation, you can compare the effects of market volatilities on Rich Development and XAC Automation 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 Rich Development with a short position of XAC Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rich Development and XAC Automation.
Diversification Opportunities for Rich Development and XAC Automation
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rich and XAC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rich Development Co and XAC Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAC Automation and Rich Development 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 Rich Development Co are associated (or correlated) with XAC Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAC Automation has no effect on the direction of Rich Development i.e., Rich Development and XAC Automation go up and down completely randomly.
Pair Corralation between Rich Development and XAC Automation
Assuming the 90 days trading horizon Rich Development is expected to generate 3.21 times less return on investment than XAC Automation. But when comparing it to its historical volatility, Rich Development Co is 1.1 times less risky than XAC Automation. It trades about 0.01 of its potential returns per unit of risk. XAC Automation is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,245 in XAC Automation on September 4, 2024 and sell it today you would earn a total of 360.00 from holding XAC Automation or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Rich Development Co vs. XAC Automation
Performance |
| Timeline |
| Rich Development |
| XAC Automation |
Rich Development and XAC Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rich Development and XAC Automation
The main advantage of trading using opposite Rich Development and XAC Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rich Development position performs unexpectedly, XAC Automation 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 XAC Automation will offset losses from the drop in XAC Automation's long position.| Rich Development vs. Kenmec Mechanical Engineering | Rich Development vs. XAC Automation | Rich Development vs. AVY Precision Technology | Rich Development vs. Hung Sheng Construction |
| XAC Automation vs. Chinese Maritime Transport | XAC Automation vs. Lian Hwa Foods | XAC Automation vs. Emerging Display Technologies | XAC Automation vs. Mercuries Life Insurance |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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