Correlation Between Excellence Optoelectronic and Newretail
Can any of the company-specific risk be diversified away by investing in both Excellence Optoelectronic and Newretail 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 Excellence Optoelectronic and Newretail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excellence Optoelectronic and Newretail Co, you can compare the effects of market volatilities on Excellence Optoelectronic and Newretail 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 Excellence Optoelectronic with a short position of Newretail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellence Optoelectronic and Newretail.
Diversification Opportunities for Excellence Optoelectronic and Newretail
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Excellence and Newretail is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Excellence Optoelectronic and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail and Excellence Optoelectronic 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 Excellence Optoelectronic are associated (or correlated) with Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Excellence Optoelectronic i.e., Excellence Optoelectronic and Newretail go up and down completely randomly.
Pair Corralation between Excellence Optoelectronic and Newretail
Assuming the 90 days trading horizon Excellence Optoelectronic is expected to generate 6.1 times less return on investment than Newretail. But when comparing it to its historical volatility, Excellence Optoelectronic is 1.08 times less risky than Newretail. It trades about 0.05 of its potential returns per unit of risk. Newretail Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,010 in Newretail Co on August 30, 2024 and sell it today you would earn a total of 585.00 from holding Newretail Co or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Excellence Optoelectronic vs. Newretail Co
Performance |
| Timeline |
| Excellence Optoelectronic |
| Newretail |
Excellence Optoelectronic and Newretail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excellence Optoelectronic and Newretail
The main advantage of trading using opposite Excellence Optoelectronic and Newretail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excellence Optoelectronic position performs unexpectedly, Newretail 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 Newretail will offset losses from the drop in Newretail's long position.| Excellence Optoelectronic vs. Hota Industrial Mfg | Excellence Optoelectronic vs. BizLink Holding | Excellence Optoelectronic vs. Tong Hsing Electronic | Excellence Optoelectronic vs. SDI Corp |
| Newretail vs. Simple Mart Retail | Newretail vs. Johnson Health Tech | Newretail vs. Pacific Construction Co | Newretail vs. Kindom Construction 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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