Correlation Between Dover and Amaero International
Can any of the company-specific risk be diversified away by investing in both Dover and Amaero International 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 Dover and Amaero International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dover and Amaero International, you can compare the effects of market volatilities on Dover and Amaero International 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 Dover with a short position of Amaero International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dover and Amaero International.
Diversification Opportunities for Dover and Amaero International
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dover and Amaero is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dover and Amaero International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaero International and Dover 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 Dover are associated (or correlated) with Amaero International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaero International has no effect on the direction of Dover i.e., Dover and Amaero International go up and down completely randomly.
Pair Corralation between Dover and Amaero International
Considering the 90-day investment horizon Dover is expected to generate 1.46 times less return on investment than Amaero International. But when comparing it to its historical volatility, Dover is 4.27 times less risky than Amaero International. It trades about 0.13 of its potential returns per unit of risk. Amaero International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Amaero International on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Amaero International or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Dover vs. Amaero International
Performance |
| Timeline |
| Dover |
| Amaero International |
Dover and Amaero International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dover and Amaero International
The main advantage of trading using opposite Dover and Amaero International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dover position performs unexpectedly, Amaero International 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 Amaero International will offset losses from the drop in Amaero International's long position.The idea behind Dover and Amaero International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amaero International vs. Atlas Copco AB | Amaero International vs. Arista Power | Amaero International vs. Alfa Laval AB | Amaero International vs. American Commerce Solutions |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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