Correlation Between Career Technology and Primax Electronics
Can any of the company-specific risk be diversified away by investing in both Career Technology and Primax 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 Career Technology and Primax Electronics 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 Primax Electronics, you can compare the effects of market volatilities on Career Technology and Primax 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 Career Technology with a short position of Primax Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Career Technology and Primax Electronics.
Diversification Opportunities for Career Technology and Primax Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Career and Primax is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Career Technology MFG and Primax Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primax Electronics 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 Primax Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primax Electronics has no effect on the direction of Career Technology i.e., Career Technology and Primax Electronics go up and down completely randomly.
Pair Corralation between Career Technology and Primax Electronics
Assuming the 90 days trading horizon Career Technology MFG is expected to under-perform the Primax Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Career Technology MFG is 1.35 times less risky than Primax Electronics. The stock trades about -0.44 of its potential returns per unit of risk. The Primax Electronics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,880 in Primax Electronics on September 4, 2024 and sell it today you would earn a total of 460.00 from holding Primax Electronics or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Career Technology MFG vs. Primax Electronics
Performance |
| Timeline |
| Career Technology MFG |
| Primax Electronics |
Career Technology and Primax Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Career Technology and Primax Electronics
The main advantage of trading using opposite Career Technology and Primax Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Career Technology position performs unexpectedly, Primax 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 Primax Electronics will offset losses from the drop in Primax Electronics' long position.| Career Technology vs. Taiwan Semiconductor Manufacturing | Career Technology vs. Yang Ming Marine | Career Technology vs. ASE Industrial Holding | Career Technology vs. AU Optronics |
| Primax Electronics vs. Taiwan Semiconductor Manufacturing | Primax Electronics vs. Yang Ming Marine | Primax Electronics vs. ASE Industrial Holding | Primax Electronics vs. AU Optronics |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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