Correlation Between Environmental and Advanced Braking
Can any of the company-specific risk be diversified away by investing in both Environmental and Advanced Braking 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 Environmental and Advanced Braking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Environmental Group and Advanced Braking Technology, you can compare the effects of market volatilities on Environmental and Advanced Braking 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 Environmental with a short position of Advanced Braking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental and Advanced Braking.
Diversification Opportunities for Environmental and Advanced Braking
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Environmental and Advanced is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Environmental Group and Advanced Braking Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Braking Tec and Environmental 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 The Environmental Group are associated (or correlated) with Advanced Braking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Braking Tec has no effect on the direction of Environmental i.e., Environmental and Advanced Braking go up and down completely randomly.
Pair Corralation between Environmental and Advanced Braking
Assuming the 90 days trading horizon The Environmental Group is expected to under-perform the Advanced Braking. In addition to that, Environmental is 1.54 times more volatile than Advanced Braking Technology. It trades about -0.06 of its total potential returns per unit of risk. Advanced Braking Technology is currently generating about 0.03 per unit of volatility. If you would invest 7.70 in Advanced Braking Technology on January 25, 2025 and sell it today you would earn a total of 0.40 from holding Advanced Braking Technology or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Environmental Group vs. Advanced Braking Technology
Performance |
| Timeline |
| The Environmental |
| Advanced Braking Tec |
Environmental and Advanced Braking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Environmental and Advanced Braking
The main advantage of trading using opposite Environmental and Advanced Braking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmental position performs unexpectedly, Advanced Braking 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 Advanced Braking will offset losses from the drop in Advanced Braking's long position.| Environmental vs. Predictive Discovery | Environmental vs. WA1 Resources | Environmental vs. Mindax Limited | Environmental vs. Brightstar Resources |
| Advanced Braking vs. Australian United Investment | Advanced Braking vs. Platinum Asia Investments | Advanced Braking vs. Argo Investments | Advanced Braking vs. Djerriwarrh Investments |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |