Correlation Between Allied Electronics and CA Sales
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and CA Sales 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 CA Sales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and CA Sales Holdings, you can compare the effects of market volatilities on Allied Electronics and CA Sales 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 CA Sales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and CA Sales.
Diversification Opportunities for Allied Electronics and CA Sales
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Allied and CAA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and CA Sales Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Sales Holdings 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 CA Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Sales Holdings has no effect on the direction of Allied Electronics i.e., Allied Electronics and CA Sales go up and down completely randomly.
Pair Corralation between Allied Electronics and CA Sales
Assuming the 90 days trading horizon Allied Electronics is expected to generate 1.15 times less return on investment than CA Sales. In addition to that, Allied Electronics is 1.11 times more volatile than CA Sales Holdings. It trades about 0.08 of its total potential returns per unit of risk. CA Sales Holdings is currently generating about 0.1 per unit of volatility. If you would invest 59,670 in CA Sales Holdings on August 28, 2024 and sell it today you would earn a total of 95,330 from holding CA Sales Holdings or generate 159.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Electronics vs. CA Sales Holdings
Performance |
| Timeline |
| Allied Electronics |
| CA Sales Holdings |
Allied Electronics and CA Sales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Electronics and CA Sales
The main advantage of trading using opposite Allied Electronics and CA Sales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, CA Sales 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 CA Sales will offset losses from the drop in CA Sales' long position.| Allied Electronics vs. Centaur Bci Balanced | Allied Electronics vs. Growthpoint Properties | Allied Electronics vs. Bowler Metcalf | Allied Electronics vs. Shoprite Holdings |
| CA Sales vs. Sasol Ltd Bee | CA Sales vs. Growthpoint Properties | CA Sales vs. AfricaRhodium ETF | CA Sales vs. CoreShares Preference Share |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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