Correlation Between AOYAMA TRADING and GOODTECH ASA
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING and GOODTECH ASA 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 AOYAMA TRADING and GOODTECH ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and GOODTECH ASA A, you can compare the effects of market volatilities on AOYAMA TRADING and GOODTECH ASA 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 AOYAMA TRADING with a short position of GOODTECH ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and GOODTECH ASA.
Diversification Opportunities for AOYAMA TRADING and GOODTECH ASA
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AOYAMA and GOODTECH is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and GOODTECH ASA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODTECH ASA A and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with GOODTECH ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODTECH ASA A has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and GOODTECH ASA go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and GOODTECH ASA
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 2.76 times more return on investment than GOODTECH ASA. However, AOYAMA TRADING is 2.76 times more volatile than GOODTECH ASA A. It trades about 0.24 of its potential returns per unit of risk. GOODTECH ASA A is currently generating about -0.25 per unit of risk. If you would invest 835.00 in AOYAMA TRADING on August 30, 2024 and sell it today you would earn a total of 565.00 from holding AOYAMA TRADING or generate 67.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
AOYAMA TRADING vs. GOODTECH ASA A
Performance |
| Timeline |
| AOYAMA TRADING |
| GOODTECH ASA A |
AOYAMA TRADING and GOODTECH ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOYAMA TRADING and GOODTECH ASA
The main advantage of trading using opposite AOYAMA TRADING and GOODTECH ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING position performs unexpectedly, GOODTECH ASA 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 GOODTECH ASA will offset losses from the drop in GOODTECH ASA's long position.The idea behind AOYAMA TRADING and GOODTECH ASA A 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.| GOODTECH ASA vs. RETAIL FOOD GROUP | GOODTECH ASA vs. FLOW TRADERS LTD | GOODTECH ASA vs. AOYAMA TRADING | GOODTECH ASA vs. SCANSOURCE |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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