Correlation Between Advanced Braking and Credit Clear
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Credit Clear 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 Credit Clear 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 Credit Clear, you can compare the effects of market volatilities on Advanced Braking and Credit Clear 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 Credit Clear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Credit Clear.
Diversification Opportunities for Advanced Braking and Credit Clear
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Credit is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Credit Clear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Clear 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 Credit Clear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Clear has no effect on the direction of Advanced Braking i.e., Advanced Braking and Credit Clear go up and down completely randomly.
Pair Corralation between Advanced Braking and Credit Clear
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 0.74 times more return on investment than Credit Clear. However, Advanced Braking Technology is 1.36 times less risky than Credit Clear. It trades about 0.06 of its potential returns per unit of risk. Credit Clear is currently generating about 0.02 per unit of risk. If you would invest 4.30 in Advanced Braking Technology on August 29, 2024 and sell it today you would earn a total of 4.60 from holding Advanced Braking Technology or generate 106.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Credit Clear
Performance |
| Timeline |
| Advanced Braking Tec |
| Credit Clear |
Advanced Braking and Credit Clear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Credit Clear
The main advantage of trading using opposite Advanced Braking and Credit Clear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Credit Clear 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 Credit Clear will offset losses from the drop in Credit Clear's long position.| Advanced Braking vs. Summit Resources Limited | Advanced Braking vs. Champion Iron | Advanced Braking vs. Ridley | Advanced Braking vs. Peel Mining |
| Credit Clear vs. PVW Resources | Credit Clear vs. Woolworths | Credit Clear vs. Wesfarmers | Credit Clear vs. Coles 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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