Correlation Between Advanced Braking and Sims
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Sims 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 Sims 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 Sims, you can compare the effects of market volatilities on Advanced Braking and Sims 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 Sims. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Sims.
Diversification Opportunities for Advanced Braking and Sims
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advanced and Sims is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Sims in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims 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 Sims. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims has no effect on the direction of Advanced Braking i.e., Advanced Braking and Sims go up and down completely randomly.
Pair Corralation between Advanced Braking and Sims
Assuming the 90 days trading horizon Advanced Braking is expected to generate 1.02 times less return on investment than Sims. In addition to that, Advanced Braking is 1.13 times more volatile than Sims. It trades about 0.21 of its total potential returns per unit of risk. Sims is currently generating about 0.24 per unit of volatility. If you would invest 1,204 in Sims on November 3, 2024 and sell it today you would earn a total of 124.00 from holding Sims or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Sims
Performance |
| Timeline |
| Advanced Braking Tec |
| Sims |
Advanced Braking and Sims Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Sims
The main advantage of trading using opposite Advanced Braking and Sims positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Sims 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 Sims will offset losses from the drop in Sims' long position.| Advanced Braking vs. Sports Entertainment Group | Advanced Braking vs. Hutchison Telecommunications | Advanced Braking vs. Actinogen Medical | Advanced Braking vs. ARN Media Limited |
| Sims vs. Perpetual Credit Income | Sims vs. Apiam Animal Health | Sims vs. Sonic Healthcare | Sims vs. Oceania 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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