Correlation Between Sports Gear and Aker Technology
Can any of the company-specific risk be diversified away by investing in both Sports Gear and Aker 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 Sports Gear and Aker Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sports Gear Co and Aker Technology Co, you can compare the effects of market volatilities on Sports Gear and Aker 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 Sports Gear with a short position of Aker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Gear and Aker Technology.
Diversification Opportunities for Sports Gear and Aker Technology
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sports and Aker is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co and Aker Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Technology and Sports Gear 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 Sports Gear Co are associated (or correlated) with Aker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Technology has no effect on the direction of Sports Gear i.e., Sports Gear and Aker Technology go up and down completely randomly.
Pair Corralation between Sports Gear and Aker Technology
Assuming the 90 days trading horizon Sports Gear Co is expected to generate 0.9 times more return on investment than Aker Technology. However, Sports Gear Co is 1.11 times less risky than Aker Technology. It trades about 0.09 of its potential returns per unit of risk. Aker Technology Co is currently generating about 0.02 per unit of risk. If you would invest 6,903 in Sports Gear Co on September 1, 2024 and sell it today you would earn a total of 6,947 from holding Sports Gear Co or generate 100.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sports Gear Co vs. Aker Technology Co
Performance |
| Timeline |
| Sports Gear |
| Aker Technology |
Sports Gear and Aker Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Gear and Aker Technology
The main advantage of trading using opposite Sports Gear and Aker Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Gear position performs unexpectedly, Aker 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 Aker Technology will offset losses from the drop in Aker Technology's long position.| Sports Gear vs. Giant Manufacturing Co | Sports Gear vs. Merida Industry Co | Sports Gear vs. Johnson Health Tech | Sports Gear vs. Power Wind Health |
| Aker Technology vs. Hon Hai Precision | Aker Technology vs. Delta Electronics | Aker Technology vs. LARGAN Precision Co | Aker Technology vs. Yageo 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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