Correlation Between Advanced Braking and Acrow
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Acrow 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 Advanced Braking and Acrow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and Acrow Limited, you can compare the effects of market volatilities on Advanced Braking and Acrow 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 Advanced Braking with a short position of Acrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Acrow.
Diversification Opportunities for Advanced Braking and Acrow
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advanced and Acrow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Acrow Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrow Limited and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Acrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrow Limited has no effect on the direction of Advanced Braking i.e., Advanced Braking and Acrow go up and down completely randomly.
Pair Corralation between Advanced Braking and Acrow
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 1.34 times more return on investment than Acrow. However, Advanced Braking is 1.34 times more volatile than Acrow Limited. It trades about 0.11 of its potential returns per unit of risk. Acrow Limited is currently generating about 0.04 per unit of risk. If you would invest 6.40 in Advanced Braking Technology on November 3, 2024 and sell it today you would earn a total of 2.40 from holding Advanced Braking Technology or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Acrow Limited
Performance |
| Timeline |
| Advanced Braking Tec |
| Acrow Limited |
Advanced Braking and Acrow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Acrow
The main advantage of trading using opposite Advanced Braking and Acrow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Acrow 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 Acrow will offset losses from the drop in Acrow's long position.| Advanced Braking vs. Sports Entertainment Group | Advanced Braking vs. Hutchison Telecommunications | Advanced Braking vs. Actinogen Medical | Advanced Braking vs. ARN Media Limited |
| Acrow vs. Hotel Property Investments | Acrow vs. Perpetual Credit Income | Acrow vs. Australian Strategic Materials | Acrow vs. Finexia Financial Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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