Correlation Between Dear Cashmere and Amada
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and Amada 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 Dear Cashmere and Amada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and Amada Co, you can compare the effects of market volatilities on Dear Cashmere and Amada 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 Dear Cashmere with a short position of Amada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Amada.
Diversification Opportunities for Dear Cashmere and Amada
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dear and Amada is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Amada Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amada and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with Amada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amada has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Amada go up and down completely randomly.
Pair Corralation between Dear Cashmere and Amada
Given the investment horizon of 90 days Dear Cashmere Holding is expected to generate 4.96 times more return on investment than Amada. However, Dear Cashmere is 4.96 times more volatile than Amada Co. It trades about 0.11 of its potential returns per unit of risk. Amada Co is currently generating about -0.22 per unit of risk. If you would invest 14.00 in Dear Cashmere Holding on September 5, 2024 and sell it today you would earn a total of 2.00 from holding Dear Cashmere Holding or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dear Cashmere Holding vs. Amada Co
Performance |
| Timeline |
| Dear Cashmere Holding |
| Amada |
Dear Cashmere and Amada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dear Cashmere and Amada
The main advantage of trading using opposite Dear Cashmere and Amada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere position performs unexpectedly, Amada 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 Amada will offset losses from the drop in Amada's long position.| Dear Cashmere vs. One World Universe | Dear Cashmere vs. All American Pet | Dear Cashmere vs. Ilustrato Pictures | Dear Cashmere vs. Quality Industrial Corp |
| Amada vs. Dear Cashmere Holding | Amada vs. Goff Corp | Amada vs. Wialan Technologies | Amada vs. Cgrowth Capital |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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