Correlation Between Career Technology and Elite Material
Can any of the company-specific risk be diversified away by investing in both Career Technology and Elite Material 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 Career Technology and Elite Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Career Technology MFG and Elite Material Co, you can compare the effects of market volatilities on Career Technology and Elite Material 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 Career Technology with a short position of Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Career Technology and Elite Material.
Diversification Opportunities for Career Technology and Elite Material
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Career and Elite is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Career Technology MFG and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material and Career Technology 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 Career Technology MFG are associated (or correlated) with Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of Career Technology i.e., Career Technology and Elite Material go up and down completely randomly.
Pair Corralation between Career Technology and Elite Material
Assuming the 90 days trading horizon Career Technology MFG is expected to under-perform the Elite Material. But the stock apears to be less risky and, when comparing its historical volatility, Career Technology MFG is 1.7 times less risky than Elite Material. The stock trades about -0.24 of its potential returns per unit of risk. The Elite Material Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 47,950 in Elite Material Co on September 12, 2024 and sell it today you would earn a total of 9,250 from holding Elite Material Co or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Career Technology MFG vs. Elite Material Co
Performance |
| Timeline |
| Career Technology MFG |
| Elite Material |
Career Technology and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Career Technology and Elite Material
The main advantage of trading using opposite Career Technology and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Career Technology position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.| Career Technology vs. Flexium Interconnect | Career Technology vs. Compeq Manufacturing Co | Career Technology vs. Unimicron Technology Corp | Career Technology vs. Tripod Technology Corp |
| Elite Material vs. AU Optronics | Elite Material vs. Innolux Corp | Elite Material vs. Ruentex Development Co | Elite Material vs. WiseChip Semiconductor |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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