Correlation Between Riverway Management and Global Electrical
Can any of the company-specific risk be diversified away by investing in both Riverway Management 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 Riverway Management and Global Electrical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Riverway Management JSC and Global Electrical Technology, you can compare the effects of market volatilities on Riverway Management 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 Riverway Management with a short position of Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riverway Management and Global Electrical.
Diversification Opportunities for Riverway Management and Global Electrical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Riverway and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Riverway Management JSC and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical and Riverway Management 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 Riverway Management JSC 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 Riverway Management i.e., Riverway Management and Global Electrical go up and down completely randomly.
Pair Corralation between Riverway Management and Global Electrical
Assuming the 90 days trading horizon Riverway Management JSC is expected to under-perform the Global Electrical. But the stock apears to be less risky and, when comparing its historical volatility, Riverway Management JSC is 1.44 times less risky than Global Electrical. The stock trades about -0.03 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 | Significant |
| Accuracy | 95.19% |
| Values | Daily Returns |
Riverway Management JSC vs. Global Electrical Technology
Performance |
| Timeline |
| Riverway Management JSC |
| Global Electrical |
Riverway Management and Global Electrical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Riverway Management and Global Electrical
The main advantage of trading using opposite Riverway Management and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riverway Management 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.| Riverway Management vs. Southern Rubber Industry | Riverway Management vs. Vietnam Rubber Group | Riverway Management vs. Phuoc Hoa Rubber | Riverway Management vs. Viet Thanh Plastic |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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