Correlation Between Autosports and Energy Technologies
Can any of the company-specific risk be diversified away by investing in both Autosports and Energy Technologies 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 Autosports and Energy Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Energy Technologies Limited, you can compare the effects of market volatilities on Autosports and Energy Technologies 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 Autosports with a short position of Energy Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Energy Technologies.
Diversification Opportunities for Autosports and Energy Technologies
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Autosports and Energy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Energy Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Technologies and Autosports 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 Autosports Group are associated (or correlated) with Energy Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Technologies has no effect on the direction of Autosports i.e., Autosports and Energy Technologies go up and down completely randomly.
Pair Corralation between Autosports and Energy Technologies
Assuming the 90 days trading horizon Autosports Group is expected to under-perform the Energy Technologies. In addition to that, Autosports is 2.0 times more volatile than Energy Technologies Limited. It trades about -0.67 of its total potential returns per unit of risk. Energy Technologies Limited is currently generating about 0.21 per unit of volatility. If you would invest 3.00 in Energy Technologies Limited on August 29, 2024 and sell it today you would earn a total of 0.10 from holding Energy Technologies Limited or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Autosports Group vs. Energy Technologies Limited
Performance |
| Timeline |
| Autosports Group |
| Energy Technologies |
Autosports and Energy Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and Energy Technologies
The main advantage of trading using opposite Autosports and Energy Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Energy Technologies 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 Energy Technologies will offset losses from the drop in Energy Technologies' long position.| Autosports vs. Summit Resources Limited | Autosports vs. Champion Iron | Autosports vs. Ridley | Autosports vs. Peel Mining |
| Energy Technologies vs. Treasury Wine Estates | Energy Technologies vs. Global Health | Energy Technologies vs. Healthco Healthcare and | Energy Technologies vs. EMvision Medical Devices |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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