Correlation Between Industrial Urban and Global Electrical
Can any of the company-specific risk be diversified away by investing in both Industrial Urban and Global Electrical 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 Industrial Urban and Global Electrical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Urban Development and Global Electrical Technology, you can compare the effects of market volatilities on Industrial Urban and Global Electrical 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 Industrial Urban with a short position of Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Urban and Global Electrical.
Diversification Opportunities for Industrial Urban and Global Electrical
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Industrial and Global is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Urban Development and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical and Industrial Urban 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 Industrial Urban Development are associated (or correlated) with Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Industrial Urban i.e., Industrial Urban and Global Electrical go up and down completely randomly.
Pair Corralation between Industrial Urban and Global Electrical
Assuming the 90 days trading horizon Industrial Urban Development is expected to under-perform the Global Electrical. But the stock apears to be less risky and, when comparing its historical volatility, Industrial Urban Development is 1.45 times less risky than Global Electrical. The stock trades about -0.02 of its potential returns per unit of risk. The Global Electrical Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,275,397 in Global Electrical Technology on September 2, 2024 and sell it today you would earn a total of 374,603 from holding Global Electrical Technology or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.34% |
| Values | Daily Returns |
Industrial Urban Development vs. Global Electrical Technology
Performance |
| Timeline |
| Industrial Urban Dev |
| Global Electrical |
Industrial Urban and Global Electrical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Urban and Global Electrical
The main advantage of trading using opposite Industrial Urban and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Urban position performs unexpectedly, Global Electrical 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 Global Electrical will offset losses from the drop in Global Electrical's long position.| Industrial Urban vs. PetroVietnam Transportation Corp | Industrial Urban vs. Petrovietnam Drilling Mud | Industrial Urban vs. Vietnam Petroleum Transport | Industrial Urban vs. Hochiminh City Metal |
| Global Electrical vs. DOMESCO Medical Import | Global Electrical vs. Binh Duong Trade | Global Electrical vs. Petrovietnam Technical Services | Global Electrical vs. VTC Telecommunications JSC |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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