Correlation Between Andes Technology and Alexander Marine
Can any of the company-specific risk be diversified away by investing in both Andes Technology and Alexander Marine 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 Andes Technology and Alexander Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andes Technology Corp and Alexander Marine Co, you can compare the effects of market volatilities on Andes Technology and Alexander Marine 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 Andes Technology with a short position of Alexander Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andes Technology and Alexander Marine.
Diversification Opportunities for Andes Technology and Alexander Marine
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Andes and Alexander is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Andes Technology Corp and Alexander Marine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Marine and Andes 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 Andes Technology Corp are associated (or correlated) with Alexander Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Marine has no effect on the direction of Andes Technology i.e., Andes Technology and Alexander Marine go up and down completely randomly.
Pair Corralation between Andes Technology and Alexander Marine
Assuming the 90 days trading horizon Andes Technology Corp is expected to generate 1.08 times more return on investment than Alexander Marine. However, Andes Technology is 1.08 times more volatile than Alexander Marine Co. It trades about -0.05 of its potential returns per unit of risk. Alexander Marine Co is currently generating about -0.08 per unit of risk. If you would invest 55,600 in Andes Technology Corp on November 3, 2024 and sell it today you would lose (17,350) from holding Andes Technology Corp or give up 31.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Andes Technology Corp vs. Alexander Marine Co
Performance |
| Timeline |
| Andes Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Alexander Marine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Andes Technology and Alexander Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andes Technology and Alexander Marine
The main advantage of trading using opposite Andes Technology and Alexander Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andes Technology position performs unexpectedly, Alexander Marine 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 Alexander Marine will offset losses from the drop in Alexander Marine's long position.The idea behind Andes Technology Corp and Alexander Marine 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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