Correlation Between Global Brands and Career Technology
Can any of the company-specific risk be diversified away by investing in both Global Brands and Career Technology 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 Global Brands and Career Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Brands Manufacture and Career Technology MFG, you can compare the effects of market volatilities on Global Brands and Career Technology 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 Global Brands with a short position of Career Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Brands and Career Technology.
Diversification Opportunities for Global Brands and Career Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Career is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global Brands Manufacture and Career Technology MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Career Technology MFG and Global Brands 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 Global Brands Manufacture are associated (or correlated) with Career Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Career Technology MFG has no effect on the direction of Global Brands i.e., Global Brands and Career Technology go up and down completely randomly.
Pair Corralation between Global Brands and Career Technology
Assuming the 90 days trading horizon Global Brands Manufacture is expected to generate 0.99 times more return on investment than Career Technology. However, Global Brands Manufacture is 1.01 times less risky than Career Technology. It trades about -0.14 of its potential returns per unit of risk. Career Technology MFG is currently generating about -0.4 per unit of risk. If you would invest 5,820 in Global Brands Manufacture on August 30, 2024 and sell it today you would lose (270.00) from holding Global Brands Manufacture or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Brands Manufacture vs. Career Technology MFG
Performance |
| Timeline |
| Global Brands Manufacture |
| Career Technology MFG |
Global Brands and Career Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Brands and Career Technology
The main advantage of trading using opposite Global Brands and Career Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Brands position performs unexpectedly, Career Technology 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 Career Technology will offset losses from the drop in Career Technology's long position.| Global Brands vs. HannStar Board Corp | Global Brands vs. ITEQ Corp | Global Brands vs. Unitech Printed Circuit | Global Brands vs. Career Technology MFG |
| Career Technology vs. Flexium Interconnect | Career Technology vs. Compeq Manufacturing Co | Career Technology vs. Unimicron Technology Corp | Career Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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