Correlation Between In Win and Prime Electronics
Can any of the company-specific risk be diversified away by investing in both In Win and Prime Electronics 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 In Win and Prime Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between In Win Development and Prime Electronics Satellitics, you can compare the effects of market volatilities on In Win and Prime Electronics 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 In Win with a short position of Prime Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of In Win and Prime Electronics.
Diversification Opportunities for In Win and Prime Electronics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 6117 and Prime is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding In Win Development and Prime Electronics Satellitics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Electronics and In Win 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 In Win Development are associated (or correlated) with Prime Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Electronics has no effect on the direction of In Win i.e., In Win and Prime Electronics go up and down completely randomly.
Pair Corralation between In Win and Prime Electronics
Assuming the 90 days trading horizon In Win Development is expected to generate 0.87 times more return on investment than Prime Electronics. However, In Win Development is 1.15 times less risky than Prime Electronics. It trades about -0.05 of its potential returns per unit of risk. Prime Electronics Satellitics is currently generating about -0.08 per unit of risk. If you would invest 10,100 in In Win Development on November 2, 2024 and sell it today you would lose (1,600) from holding In Win Development or give up 15.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
In Win Development vs. Prime Electronics Satellitics
Performance |
| Timeline |
| In Win Development |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Prime Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
In Win and Prime Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with In Win and Prime Electronics
The main advantage of trading using opposite In Win and Prime Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if In Win position performs unexpectedly, Prime Electronics 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 Prime Electronics will offset losses from the drop in Prime Electronics' long position.The idea behind In Win Development and Prime Electronics Satellitics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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