Correlation Between Access Bio and TPC Mechatronics
Can any of the company-specific risk be diversified away by investing in both Access Bio and TPC Mechatronics 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 Access Bio and TPC Mechatronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Access Bio and TPC Mechatronics, you can compare the effects of market volatilities on Access Bio and TPC Mechatronics 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 Access Bio with a short position of TPC Mechatronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Access Bio and TPC Mechatronics.
Diversification Opportunities for Access Bio and TPC Mechatronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Access and TPC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Access Bio and TPC Mechatronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPC Mechatronics and Access Bio 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 Access Bio are associated (or correlated) with TPC Mechatronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPC Mechatronics has no effect on the direction of Access Bio i.e., Access Bio and TPC Mechatronics go up and down completely randomly.
Pair Corralation between Access Bio and TPC Mechatronics
Assuming the 90 days trading horizon Access Bio is expected to generate 1.2 times more return on investment than TPC Mechatronics. However, Access Bio is 1.2 times more volatile than TPC Mechatronics. It trades about -0.01 of its potential returns per unit of risk. TPC Mechatronics is currently generating about -0.06 per unit of risk. If you would invest 798,000 in Access Bio on August 27, 2024 and sell it today you would lose (241,000) from holding Access Bio or give up 30.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Access Bio vs. TPC Mechatronics
Performance |
| Timeline |
| Access Bio |
| TPC Mechatronics |
Access Bio and TPC Mechatronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Access Bio and TPC Mechatronics
The main advantage of trading using opposite Access Bio and TPC Mechatronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Access Bio position performs unexpectedly, TPC Mechatronics 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 TPC Mechatronics will offset losses from the drop in TPC Mechatronics' long position.| Access Bio vs. DB Financial Investment | Access Bio vs. Seoul Broadcasting System | Access Bio vs. Daol Investment Securities | Access Bio vs. Sangsangin Investment Securities |
| TPC Mechatronics vs. Samsung Electronics Co | TPC Mechatronics vs. Samsung Electronics Co | TPC Mechatronics vs. Hyundai Motor Co | TPC Mechatronics vs. Hyundai Motor |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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