Correlation Between Advanced Braking and SPASX Midcap
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and SPASX Midcap 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 SPASX Midcap 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 SPASX Midcap 50, you can compare the effects of market volatilities on Advanced Braking and SPASX Midcap 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 SPASX Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and SPASX Midcap.
Diversification Opportunities for Advanced Braking and SPASX Midcap
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and SPASX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and SPASX Midcap 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPASX Midcap 50 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 SPASX Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPASX Midcap 50 has no effect on the direction of Advanced Braking i.e., Advanced Braking and SPASX Midcap go up and down completely randomly.
Pair Corralation between Advanced Braking and SPASX Midcap
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 4.96 times more return on investment than SPASX Midcap. However, Advanced Braking is 4.96 times more volatile than SPASX Midcap 50. It trades about 0.08 of its potential returns per unit of risk. SPASX Midcap 50 is currently generating about 0.1 per unit of risk. If you would invest 8.20 in Advanced Braking Technology on September 13, 2024 and sell it today you would earn a total of 0.40 from holding Advanced Braking Technology or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Advanced Braking Technology vs. SPASX Midcap 50
Performance |
| Timeline |
Advanced Braking and SPASX Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Advanced Braking Technology
Pair trading matchups for Advanced Braking
SPASX Midcap 50
Pair trading matchups for SPASX Midcap
Pair Trading with Advanced Braking and SPASX Midcap
The main advantage of trading using opposite Advanced Braking and SPASX Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, SPASX Midcap 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 SPASX Midcap will offset losses from the drop in SPASX Midcap's long position.| Advanced Braking vs. Readytech Holdings | Advanced Braking vs. Hutchison Telecommunications | Advanced Braking vs. Zoom2u Technologies | Advanced Braking vs. Energy Technologies Limited |
| SPASX Midcap vs. EROAD | SPASX Midcap vs. Vulcan Steel | SPASX Midcap vs. Aeris Environmental | SPASX Midcap vs. Champion Iron |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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