Correlation Between Advanced Braking and Dug Technology
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Dug Technology 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 Dug Technology 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 Dug Technology, you can compare the effects of market volatilities on Advanced Braking and Dug Technology 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 Dug Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Dug Technology.
Diversification Opportunities for Advanced Braking and Dug Technology
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Dug is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Dug Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dug Technology 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 Dug Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dug Technology has no effect on the direction of Advanced Braking i.e., Advanced Braking and Dug Technology go up and down completely randomly.
Pair Corralation between Advanced Braking and Dug Technology
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 0.85 times more return on investment than Dug Technology. However, Advanced Braking Technology is 1.18 times less risky than Dug Technology. It trades about 0.08 of its potential returns per unit of risk. Dug Technology is currently generating about -0.11 per unit of risk. If you would invest 6.50 in Advanced Braking Technology on October 26, 2024 and sell it today you would earn a total of 1.80 from holding Advanced Braking Technology or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Dug Technology
Performance |
| Timeline |
| Advanced Braking Tec |
| Dug Technology |
Advanced Braking and Dug Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Dug Technology
The main advantage of trading using opposite Advanced Braking and Dug Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Dug Technology 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 Dug Technology will offset losses from the drop in Dug Technology's long position.| Advanced Braking vs. Carawine Resources Limited | Advanced Braking vs. Home Consortium | Advanced Braking vs. Ainsworth Game Technology | Advanced Braking vs. Mach7 Technologies |
| Dug Technology vs. Viva Leisure | Dug Technology vs. Homeco Daily Needs | Dug Technology vs. Epsilon Healthcare | Dug Technology vs. Fisher Paykel Healthcare |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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