Correlation Between Auction Technology and Future Metals
Can any of the company-specific risk be diversified away by investing in both Auction Technology and Future Metals 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 Future Metals 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 Future Metals NL, you can compare the effects of market volatilities on Auction Technology and Future Metals 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 Future Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Future Metals.
Diversification Opportunities for Auction Technology and Future Metals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auction and Future is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL 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 Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of Auction Technology i.e., Auction Technology and Future Metals go up and down completely randomly.
Pair Corralation between Auction Technology and Future Metals
Assuming the 90 days trading horizon Auction Technology Group is expected to generate 0.42 times more return on investment than Future Metals. However, Auction Technology Group is 2.38 times less risky than Future Metals. It trades about -0.33 of its potential returns per unit of risk. Future Metals NL is currently generating about -0.41 per unit of risk. If you would invest 58,400 in Auction Technology Group on October 13, 2024 and sell it today you would lose (4,600) from holding Auction Technology Group or give up 7.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auction Technology Group vs. Future Metals NL
Performance |
| Timeline |
| Auction Technology |
| Future Metals NL |
Auction Technology and Future Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and Future Metals
The main advantage of trading using opposite Auction Technology and Future Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology position performs unexpectedly, Future Metals 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 Future Metals will offset losses from the drop in Future Metals' long position.| Auction Technology vs. Wizz Air Holdings | Auction Technology vs. British American Tobacco | Auction Technology vs. Playtech Plc | Auction Technology vs. JD Sports Fashion |
| Future Metals vs. Polar Capital Technology | Future Metals vs. Bankers Investment Trust | Future Metals vs. Cognizant Technology Solutions | Future Metals vs. Auction Technology Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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