Correlation Between Advanced Braking and Step One
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on Advanced Braking and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Step One.
Diversification Opportunities for Advanced Braking and Step One
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advanced and Step is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Advanced Braking i.e., Advanced Braking and Step One go up and down completely randomly.
Pair Corralation between Advanced Braking and Step One
Assuming the 90 days trading horizon Advanced Braking is expected to generate 1.34 times less return on investment than Step One. But when comparing it to its historical volatility, Advanced Braking Technology is 1.45 times less risky than Step One. It trades about 0.09 of its potential returns per unit of risk. Step One Clothing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Step One Clothing on September 1, 2024 and sell it today you would earn a total of 73.00 from holding Step One Clothing or generate 108.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Step One Clothing
Performance |
| Timeline |
| Advanced Braking Tec |
| Step One Clothing |
Advanced Braking and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Step One
The main advantage of trading using opposite Advanced Braking and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Advanced Braking vs. Encounter Resources | Advanced Braking vs. Tlou Energy | Advanced Braking vs. Southern Cross Gold | Advanced Braking vs. Minbos Resources |
| Step One vs. WiseTech Global Limited | Step One vs. Red Hill Iron | Step One vs. Champion Iron | Step One vs. Hutchison Telecommunications |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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