Correlation Between Advanced Braking and Carlton Investments
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Carlton Investments 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 Carlton Investments 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 Carlton Investments, you can compare the effects of market volatilities on Advanced Braking and Carlton Investments 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 Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Carlton Investments.
Diversification Opportunities for Advanced Braking and Carlton Investments
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Carlton is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments 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 Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Advanced Braking i.e., Advanced Braking and Carlton Investments go up and down completely randomly.
Pair Corralation between Advanced Braking and Carlton Investments
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 3.45 times more return on investment than Carlton Investments. However, Advanced Braking is 3.45 times more volatile than Carlton Investments. It trades about 0.1 of its potential returns per unit of risk. Carlton Investments is currently generating about 0.02 per unit of risk. If you would invest 5.40 in Advanced Braking Technology on August 28, 2024 and sell it today you would earn a total of 3.40 from holding Advanced Braking Technology or generate 62.96% 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. Carlton Investments
Performance |
| Timeline |
| Advanced Braking Tec |
| Carlton Investments |
Advanced Braking and Carlton Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Carlton Investments
The main advantage of trading using opposite Advanced Braking and Carlton Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Carlton Investments 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 Carlton Investments will offset losses from the drop in Carlton Investments' long position.| Advanced Braking vs. Aneka Tambang Tbk | Advanced Braking vs. BHP Group Limited | Advanced Braking vs. Rio Tinto | Advanced Braking vs. Macquarie Group Ltd |
| Carlton Investments vs. Australian Foundation Investment | Carlton Investments vs. GQG Partners DRC | Carlton Investments vs. Metrics Master Income | Carlton Investments vs. L1 Long Short |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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