Correlation Between Energy Technologies and Austchina Holdings
Can any of the company-specific risk be diversified away by investing in both Energy Technologies and Austchina Holdings 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 Energy Technologies and Austchina Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Technologies Limited and Austchina Holdings, you can compare the effects of market volatilities on Energy Technologies and Austchina Holdings 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 Energy Technologies with a short position of Austchina Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Technologies and Austchina Holdings.
Diversification Opportunities for Energy Technologies and Austchina Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Austchina is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited and Austchina Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austchina Holdings and Energy Technologies 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 Energy Technologies Limited are associated (or correlated) with Austchina Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austchina Holdings has no effect on the direction of Energy Technologies i.e., Energy Technologies and Austchina Holdings go up and down completely randomly.
Pair Corralation between Energy Technologies and Austchina Holdings
Assuming the 90 days trading horizon Energy Technologies Limited is expected to under-perform the Austchina Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Energy Technologies Limited is 7.85 times less risky than Austchina Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Austchina Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Austchina Holdings on September 12, 2024 and sell it today you would lose (0.10) from holding Austchina Holdings or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Technologies Limited vs. Austchina Holdings
Performance |
| Timeline |
| Energy Technologies |
| Austchina Holdings |
Energy Technologies and Austchina Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Technologies and Austchina Holdings
The main advantage of trading using opposite Energy Technologies and Austchina Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies position performs unexpectedly, Austchina Holdings 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 Austchina Holdings will offset losses from the drop in Austchina Holdings' long position.| Energy Technologies vs. Aneka Tambang Tbk | Energy Technologies vs. Commonwealth Bank of | Energy Technologies vs. ANZ Group Holdings | Energy Technologies vs. National Australia Bank |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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