Correlation Between Motech Industries and ANJI Technology
Can any of the company-specific risk be diversified away by investing in both Motech Industries and ANJI 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 Motech Industries and ANJI Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motech Industries Co and ANJI Technology Co, you can compare the effects of market volatilities on Motech Industries and ANJI 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 Motech Industries with a short position of ANJI Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motech Industries and ANJI Technology.
Diversification Opportunities for Motech Industries and ANJI Technology
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Motech and ANJI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Motech Industries Co and ANJI Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANJI Technology and Motech Industries 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 Motech Industries Co are associated (or correlated) with ANJI Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANJI Technology has no effect on the direction of Motech Industries i.e., Motech Industries and ANJI Technology go up and down completely randomly.
Pair Corralation between Motech Industries and ANJI Technology
Assuming the 90 days trading horizon Motech Industries Co is expected to under-perform the ANJI Technology. But the stock apears to be less risky and, when comparing its historical volatility, Motech Industries Co is 1.23 times less risky than ANJI Technology. The stock trades about -0.09 of its potential returns per unit of risk. The ANJI Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,550 in ANJI Technology Co on November 2, 2024 and sell it today you would earn a total of 420.00 from holding ANJI Technology Co or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Motech Industries Co vs. ANJI Technology Co
Performance |
| Timeline |
| Motech Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ANJI Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Motech Industries and ANJI Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motech Industries and ANJI Technology
The main advantage of trading using opposite Motech Industries and ANJI Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motech Industries position performs unexpectedly, ANJI 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 ANJI Technology will offset losses from the drop in ANJI Technology's long position.The idea behind Motech Industries Co and ANJI Technology Co 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 CEOs Directory module to screen CEOs from public companies around the world.
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