Correlation Between Allied Electronics and Bid
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and Bid 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 Allied Electronics and Bid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and Bid Corporation, you can compare the effects of market volatilities on Allied Electronics and Bid 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 Allied Electronics with a short position of Bid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and Bid.
Diversification Opportunities for Allied Electronics and Bid
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allied and Bid is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and Bid Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bid Corporation and Allied Electronics 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 Allied Electronics are associated (or correlated) with Bid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bid Corporation has no effect on the direction of Allied Electronics i.e., Allied Electronics and Bid go up and down completely randomly.
Pair Corralation between Allied Electronics and Bid
Assuming the 90 days trading horizon Allied Electronics is expected to generate 1.02 times more return on investment than Bid. However, Allied Electronics is 1.02 times more volatile than Bid Corporation. It trades about 0.22 of its potential returns per unit of risk. Bid Corporation is currently generating about 0.1 per unit of risk. If you would invest 182,900 in Allied Electronics on August 29, 2024 and sell it today you would earn a total of 16,100 from holding Allied Electronics or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Electronics vs. Bid Corp.
Performance |
| Timeline |
| Allied Electronics |
| Bid Corporation |
Allied Electronics and Bid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Electronics and Bid
The main advantage of trading using opposite Allied Electronics and Bid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, Bid 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 Bid will offset losses from the drop in Bid's long position.| Allied Electronics vs. Deneb Investments | Allied Electronics vs. Reinet Investments SCA | Allied Electronics vs. Lesaka Technologies | Allied Electronics vs. Afine Investments |
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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