Correlation Between Euro Tech and Arts Way
Can any of the company-specific risk be diversified away by investing in both Euro Tech and Arts Way 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 Euro Tech and Arts Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euro Tech Holdings and Arts Way Manufacturing Co, you can compare the effects of market volatilities on Euro Tech and Arts Way 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 Euro Tech with a short position of Arts Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Tech and Arts Way.
Diversification Opportunities for Euro Tech and Arts Way
Modest diversification
The 3 months correlation between Euro and Arts is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Euro Tech Holdings and Arts Way Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arts Way Manufacturing and Euro Tech 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 Euro Tech Holdings are associated (or correlated) with Arts Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arts Way Manufacturing has no effect on the direction of Euro Tech i.e., Euro Tech and Arts Way go up and down completely randomly.
Pair Corralation between Euro Tech and Arts Way
Given the investment horizon of 90 days Euro Tech is expected to generate 31.81 times less return on investment than Arts Way. But when comparing it to its historical volatility, Euro Tech Holdings is 14.63 times less risky than Arts Way. It trades about 0.02 of its potential returns per unit of risk. Arts Way Manufacturing Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 260.00 in Arts Way Manufacturing Co on August 27, 2024 and sell it today you would lose (89.00) from holding Arts Way Manufacturing Co or give up 34.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
Euro Tech Holdings vs. Arts Way Manufacturing Co
Performance |
| Timeline |
| Euro Tech Holdings |
| Arts Way Manufacturing |
Euro Tech and Arts Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euro Tech and Arts Way
The main advantage of trading using opposite Euro Tech and Arts Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euro Tech position performs unexpectedly, Arts Way 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 Arts Way will offset losses from the drop in Arts Way's long position.| Euro Tech vs. LiqTech International | Euro Tech vs. TOMI Environmental Solutions | Euro Tech vs. ClearSign Combustion | Euro Tech vs. Vow ASA |
| Arts Way vs. First Tractor | Arts Way vs. Ag Growth International | Arts Way vs. AmeraMex International | Arts Way vs. American Premium Water |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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