Correlation Between Allied Electronics and Oando PLC
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and Oando PLC 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 Oando PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and Oando PLC, you can compare the effects of market volatilities on Allied Electronics and Oando PLC 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 Oando PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and Oando PLC.
Diversification Opportunities for Allied Electronics and Oando PLC
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allied and Oando is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and Oando PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oando PLC 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 Oando PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oando PLC has no effect on the direction of Allied Electronics i.e., Allied Electronics and Oando PLC go up and down completely randomly.
Pair Corralation between Allied Electronics and Oando PLC
Assuming the 90 days trading horizon Allied Electronics is expected to generate 3.63 times less return on investment than Oando PLC. But when comparing it to its historical volatility, Allied Electronics is 5.72 times less risky than Oando PLC. It trades about 0.08 of its potential returns per unit of risk. Oando PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,000 in Oando PLC on September 14, 2024 and sell it today you would lose (800.00) from holding Oando PLC or give up 26.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Electronics vs. Oando PLC
Performance |
| Timeline |
| Allied Electronics |
| Oando PLC |
Allied Electronics and Oando PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Electronics and Oando PLC
The main advantage of trading using opposite Allied Electronics and Oando PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, Oando PLC 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 Oando PLC will offset losses from the drop in Oando PLC's long position.| Allied Electronics vs. Ayo Technology Solutions | Allied Electronics vs. Sasol Ltd Bee | Allied Electronics vs. Centaur Bci Balanced | Allied Electronics vs. Growthpoint Properties |
| Oando PLC vs. CA Sales Holdings | Oando PLC vs. Allied Electronics | Oando PLC vs. Frontier Transport Holdings | Oando PLC vs. Deneb 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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