Correlation Between Advanced Braking and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Mayfield Childcare 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 Mayfield Childcare 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 Mayfield Childcare, you can compare the effects of market volatilities on Advanced Braking and Mayfield Childcare 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 Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Mayfield Childcare.
Diversification Opportunities for Advanced Braking and Mayfield Childcare
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Mayfield is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare 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 Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of Advanced Braking i.e., Advanced Braking and Mayfield Childcare go up and down completely randomly.
Pair Corralation between Advanced Braking and Mayfield Childcare
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 1.27 times more return on investment than Mayfield Childcare. However, Advanced Braking is 1.27 times more volatile than Mayfield Childcare. It trades about 0.29 of its potential returns per unit of risk. Mayfield Childcare is currently generating about 0.16 per unit of risk. If you would invest 7.70 in Advanced Braking Technology on August 29, 2024 and sell it today you would earn a total of 1.20 from holding Advanced Braking Technology or generate 15.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Advanced Braking Technology vs. Mayfield Childcare
Performance |
| Timeline |
| Advanced Braking Tec |
| Mayfield Childcare |
Advanced Braking and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Mayfield Childcare
The main advantage of trading using opposite Advanced Braking and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| Advanced Braking vs. Summit Resources Limited | Advanced Braking vs. Champion Iron | Advanced Braking vs. Ridley | Advanced Braking vs. Peel Mining |
| Mayfield Childcare vs. Summit Resources Limited | Mayfield Childcare vs. Champion Iron | Mayfield Childcare vs. Ridley | Mayfield Childcare vs. Peel Mining |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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