Correlation Between Baker Steel and Auction Technology
Can any of the company-specific risk be diversified away by investing in both Baker Steel and Auction Technology 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 Baker Steel and Auction Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and Auction Technology Group, you can compare the effects of market volatilities on Baker Steel and Auction Technology 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 Baker Steel with a short position of Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and Auction Technology.
Diversification Opportunities for Baker Steel and Auction Technology
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baker and Auction is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology and Baker Steel 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 Baker Steel Resources are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Baker Steel i.e., Baker Steel and Auction Technology go up and down completely randomly.
Pair Corralation between Baker Steel and Auction Technology
Assuming the 90 days trading horizon Baker Steel Resources is expected to under-perform the Auction Technology. But the stock apears to be less risky and, when comparing its historical volatility, Baker Steel Resources is 1.77 times less risky than Auction Technology. The stock trades about -0.03 of its potential returns per unit of risk. The Auction Technology Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 54,900 in Auction Technology Group on November 6, 2024 and sell it today you would earn a total of 6,900 from holding Auction Technology Group or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Steel Resources vs. Auction Technology Group
Performance |
| Timeline |
| Baker Steel Resources |
| Auction Technology |
Baker Steel and Auction Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and Auction Technology
The main advantage of trading using opposite Baker Steel and Auction Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel position performs unexpectedly, Auction Technology 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 Auction Technology will offset losses from the drop in Auction Technology's long position.| Baker Steel vs. Veolia Environnement VE | Baker Steel vs. Symphony Environmental Technologies | Baker Steel vs. Eco Animal Health | Baker Steel vs. Planet Fitness Cl |
| Auction Technology vs. Zoom Video Communications | Auction Technology vs. Empire Metals Limited | Auction Technology vs. Cairo Communication SpA | Auction Technology vs. GoldMining |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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