Correlation Between Auction Technology and British American
Can any of the company-specific risk be diversified away by investing in both Auction Technology and British American 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 Auction Technology and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auction Technology Group and British American Tobacco, you can compare the effects of market volatilities on Auction Technology and British American 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 Auction Technology with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and British American.
Diversification Opportunities for Auction Technology and British American
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auction and British is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Auction Technology 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 Auction Technology Group are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Auction Technology i.e., Auction Technology and British American go up and down completely randomly.
Pair Corralation between Auction Technology and British American
Assuming the 90 days trading horizon Auction Technology Group is expected to generate 4.92 times more return on investment than British American. However, Auction Technology is 4.92 times more volatile than British American Tobacco. It trades about 0.29 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.12 per unit of risk. If you would invest 44,500 in Auction Technology Group on September 19, 2024 and sell it today you would earn a total of 12,000 from holding Auction Technology Group or generate 26.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auction Technology Group vs. British American Tobacco
Performance |
| Timeline |
| Auction Technology |
| British American Tobacco |
Auction Technology and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and British American
The main advantage of trading using opposite Auction Technology and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Auction Technology vs. SupplyMe Capital PLC | Auction Technology vs. Lloyds Banking Group | Auction Technology vs. Premier African Minerals | Auction Technology vs. SANTANDER UK 8 |
| British American vs. Ocean Harvest Technology | British American vs. Allianz Technology Trust | British American vs. Auction Technology Group | British American vs. Cognizant Technology Solutions |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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