Correlation Between DATA MODUL and Aluminum
Can any of the company-specific risk be diversified away by investing in both DATA MODUL and Aluminum 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 DATA MODUL and Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATA MODUL and Aluminum of, you can compare the effects of market volatilities on DATA MODUL and Aluminum 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 DATA MODUL with a short position of Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATA MODUL and Aluminum.
Diversification Opportunities for DATA MODUL and Aluminum
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DATA and Aluminum is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum and DATA MODUL 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 DATA MODUL are associated (or correlated) with Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum has no effect on the direction of DATA MODUL i.e., DATA MODUL and Aluminum go up and down completely randomly.
Pair Corralation between DATA MODUL and Aluminum
Assuming the 90 days trading horizon DATA MODUL is expected to under-perform the Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, DATA MODUL is 1.79 times less risky than Aluminum. The stock trades about -0.19 of its potential returns per unit of risk. The Aluminum of is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 56.00 in Aluminum of on October 30, 2024 and sell it today you would earn a total of 4.00 from holding Aluminum of or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATA MODUL vs. Aluminum of
Performance |
| Timeline |
| DATA MODUL |
| Aluminum |
DATA MODUL and Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATA MODUL and Aluminum
The main advantage of trading using opposite DATA MODUL and Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA MODUL position performs unexpectedly, Aluminum 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 Aluminum will offset losses from the drop in Aluminum's long position.| DATA MODUL vs. NTG Nordic Transport | DATA MODUL vs. Ultra Clean Holdings | DATA MODUL vs. DICKS Sporting Goods | DATA MODUL vs. Transport International Holdings |
| Aluminum vs. SCOTT TECHNOLOGY | Aluminum vs. AECOM TECHNOLOGY | Aluminum vs. UNIVERSAL MUSIC GROUP | Aluminum vs. Zoom Video Communications |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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