Correlation Between Advanced Braking and Strickland Metals
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Strickland Metals 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 Strickland Metals 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 Strickland Metals, you can compare the effects of market volatilities on Advanced Braking and Strickland Metals 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 Strickland Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Strickland Metals.
Diversification Opportunities for Advanced Braking and Strickland Metals
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Strickland is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Strickland Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strickland Metals 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 Strickland Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strickland Metals has no effect on the direction of Advanced Braking i.e., Advanced Braking and Strickland Metals go up and down completely randomly.
Pair Corralation between Advanced Braking and Strickland Metals
Assuming the 90 days trading horizon Advanced Braking is expected to generate 1.62 times less return on investment than Strickland Metals. But when comparing it to its historical volatility, Advanced Braking Technology is 2.05 times less risky than Strickland Metals. It trades about 0.07 of its potential returns per unit of risk. Strickland Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.25 in Strickland Metals on September 3, 2024 and sell it today you would earn a total of 3.75 from holding Strickland Metals or generate 88.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Strickland Metals
Performance |
| Timeline |
| Advanced Braking Tec |
| Strickland Metals |
Advanced Braking and Strickland Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Strickland Metals
The main advantage of trading using opposite Advanced Braking and Strickland Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Strickland Metals 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 Strickland Metals will offset losses from the drop in Strickland Metals' long position.| Advanced Braking vs. Westpac Banking | Advanced Braking vs. Champion Iron | Advanced Braking vs. iShares Global Healthcare | Advanced Braking vs. Peel Mining |
| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals vs. Aneka Tambang Tbk |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |