Correlation Between Career Technology and ITEQ Corp
Can any of the company-specific risk be diversified away by investing in both Career Technology and ITEQ Corp 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 ITEQ Corp 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 ITEQ Corp, you can compare the effects of market volatilities on Career Technology and ITEQ Corp 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 ITEQ Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Career Technology and ITEQ Corp.
Diversification Opportunities for Career Technology and ITEQ Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Career and ITEQ is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Career Technology MFG and ITEQ Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITEQ Corp 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 ITEQ Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITEQ Corp has no effect on the direction of Career Technology i.e., Career Technology and ITEQ Corp go up and down completely randomly.
Pair Corralation between Career Technology and ITEQ Corp
Assuming the 90 days trading horizon Career Technology MFG is expected to generate 2.08 times more return on investment than ITEQ Corp. However, Career Technology is 2.08 times more volatile than ITEQ Corp. It trades about 0.21 of its potential returns per unit of risk. ITEQ Corp is currently generating about 0.25 per unit of risk. If you would invest 1,455 in Career Technology MFG on November 28, 2024 and sell it today you would earn a total of 190.00 from holding Career Technology MFG or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Career Technology MFG vs. ITEQ Corp
Performance |
| Timeline |
| Career Technology MFG |
| ITEQ Corp |
Career Technology and ITEQ Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Career Technology and ITEQ Corp
The main advantage of trading using opposite Career Technology and ITEQ Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Career Technology position performs unexpectedly, ITEQ Corp 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 ITEQ Corp will offset losses from the drop in ITEQ Corp'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 |
| ITEQ Corp vs. Elite Material Co | ITEQ Corp vs. Taiwan Union Technology | ITEQ Corp vs. Unimicron Technology Corp | ITEQ Corp vs. Tripod Technology Corp |
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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