Correlation Between Allied Electronics and Oceana
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and Oceana 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 Oceana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and Oceana, you can compare the effects of market volatilities on Allied Electronics and Oceana 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 Oceana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and Oceana.
Diversification Opportunities for Allied Electronics and Oceana
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allied and Oceana is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and Oceana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceana 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 Oceana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceana has no effect on the direction of Allied Electronics i.e., Allied Electronics and Oceana go up and down completely randomly.
Pair Corralation between Allied Electronics and Oceana
Assuming the 90 days trading horizon Allied Electronics is expected to generate 2.08 times more return on investment than Oceana. However, Allied Electronics is 2.08 times more volatile than Oceana. It trades about 0.3 of its potential returns per unit of risk. Oceana is currently generating about -0.12 per unit of risk. If you would invest 181,200 in Allied Electronics on September 2, 2024 and sell it today you would earn a total of 20,800 from holding Allied Electronics or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Electronics vs. Oceana
Performance |
| Timeline |
| Allied Electronics |
| Oceana |
Allied Electronics and Oceana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Electronics and Oceana
The main advantage of trading using opposite Allied Electronics and Oceana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, Oceana 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 Oceana will offset losses from the drop in Oceana's long position.| Allied Electronics vs. Centaur Bci Balanced | Allied Electronics vs. Sabvest Capital | Allied Electronics vs. AfricaRhodium ETF | Allied Electronics vs. Indexco Limited |
| Oceana vs. RCL Foods | Oceana vs. Hosken Consolidated Investments | Oceana vs. Advtech | Oceana vs. Brimstone Investment |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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