Correlation Between Allied Electronics and Netcare
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and Netcare 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 Netcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and Netcare, you can compare the effects of market volatilities on Allied Electronics and Netcare 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 Netcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and Netcare.
Diversification Opportunities for Allied Electronics and Netcare
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Allied and Netcare is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and Netcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcare 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 Netcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcare has no effect on the direction of Allied Electronics i.e., Allied Electronics and Netcare go up and down completely randomly.
Pair Corralation between Allied Electronics and Netcare
Assuming the 90 days trading horizon Allied Electronics is expected to generate 2.19 times more return on investment than Netcare. However, Allied Electronics is 2.19 times more volatile than Netcare. It trades about 0.07 of its potential returns per unit of risk. Netcare is currently generating about -0.01 per unit of risk. If you would invest 212,500 in Allied Electronics on October 20, 2024 and sell it today you would earn a total of 6,200 from holding Allied Electronics or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Allied Electronics vs. Netcare
Performance |
| Timeline |
| Allied Electronics |
| Netcare |
Allied Electronics and Netcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Electronics and Netcare
The main advantage of trading using opposite Allied Electronics and Netcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, Netcare 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 Netcare will offset losses from the drop in Netcare's long position.| Allied Electronics vs. Brimstone Investment | Allied Electronics vs. ABSA Bank Limited | Allied Electronics vs. Frontier Transport Holdings | Allied Electronics vs. Hosken Consolidated Investments |
| Netcare vs. Life Healthcare | Netcare vs. AfroCentric Investment Corp | Netcare vs. Aveng | Netcare vs. Thungela Resources Limited |
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.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |