Correlation Between Rafael Microelectronics and Amulaire Thermal
Can any of the company-specific risk be diversified away by investing in both Rafael Microelectronics and Amulaire Thermal 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 Rafael Microelectronics and Amulaire Thermal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rafael Microelectronics and Amulaire Thermal Technology, you can compare the effects of market volatilities on Rafael Microelectronics and Amulaire Thermal 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 Rafael Microelectronics with a short position of Amulaire Thermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rafael Microelectronics and Amulaire Thermal.
Diversification Opportunities for Rafael Microelectronics and Amulaire Thermal
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rafael and Amulaire is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Microelectronics and Amulaire Thermal Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amulaire Thermal Tec and Rafael Microelectronics 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 Rafael Microelectronics are associated (or correlated) with Amulaire Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amulaire Thermal Tec has no effect on the direction of Rafael Microelectronics i.e., Rafael Microelectronics and Amulaire Thermal go up and down completely randomly.
Pair Corralation between Rafael Microelectronics and Amulaire Thermal
Assuming the 90 days trading horizon Rafael Microelectronics is expected to generate 1.55 times more return on investment than Amulaire Thermal. However, Rafael Microelectronics is 1.55 times more volatile than Amulaire Thermal Technology. It trades about 0.48 of its potential returns per unit of risk. Amulaire Thermal Technology is currently generating about 0.02 per unit of risk. If you would invest 11,850 in Rafael Microelectronics on November 5, 2024 and sell it today you would earn a total of 3,550 from holding Rafael Microelectronics or generate 29.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rafael Microelectronics vs. Amulaire Thermal Technology
Performance |
| Timeline |
| Rafael Microelectronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Amulaire Thermal Tec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Rafael Microelectronics and Amulaire Thermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rafael Microelectronics and Amulaire Thermal
The main advantage of trading using opposite Rafael Microelectronics and Amulaire Thermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rafael Microelectronics position performs unexpectedly, Amulaire Thermal 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 Amulaire Thermal will offset losses from the drop in Amulaire Thermal's long position.The idea behind Rafael Microelectronics and Amulaire Thermal Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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