Correlation Between APPLIED MATERIALS and PARK24 CO
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and PARK24 CO 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 APPLIED MATERIALS and PARK24 CO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and PARK24 LTD, you can compare the effects of market volatilities on APPLIED MATERIALS and PARK24 CO 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 APPLIED MATERIALS with a short position of PARK24 CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and PARK24 CO.
Diversification Opportunities for APPLIED MATERIALS and PARK24 CO
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APPLIED and PARK24 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and PARK24 LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARK24 LTD and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with PARK24 CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARK24 LTD has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and PARK24 CO go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and PARK24 CO
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.68 times less return on investment than PARK24 CO. But when comparing it to its historical volatility, APPLIED MATERIALS is 1.95 times less risky than PARK24 CO. It trades about 0.04 of its potential returns per unit of risk. PARK24 LTD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 775.00 in PARK24 LTD on September 1, 2024 and sell it today you would earn a total of 325.00 from holding PARK24 LTD or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
APPLIED MATERIALS vs. PARK24 LTD
Performance |
| Timeline |
| APPLIED MATERIALS |
| PARK24 LTD |
APPLIED MATERIALS and PARK24 CO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and PARK24 CO
The main advantage of trading using opposite APPLIED MATERIALS and PARK24 CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, PARK24 CO 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 PARK24 CO will offset losses from the drop in PARK24 CO's long position.| APPLIED MATERIALS vs. QBE Insurance Group | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Singapore Reinsurance | APPLIED MATERIALS vs. United Natural Foods |
| PARK24 CO vs. New Residential Investment | PARK24 CO vs. Motorcar Parts of | PARK24 CO vs. SLR Investment Corp | PARK24 CO vs. AOYAMA TRADING |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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