Correlation Between Espey Mfg and Asia Pacific
Can any of the company-specific risk be diversified away by investing in both Espey Mfg and Asia Pacific 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 Espey Mfg and Asia Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and Asia Pacific Wire, you can compare the effects of market volatilities on Espey Mfg and Asia Pacific 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 Espey Mfg with a short position of Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and Asia Pacific.
Diversification Opportunities for Espey Mfg and Asia Pacific
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Espey and Asia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Asia Pacific Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Wire and Espey Mfg 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 Espey Mfg Electronics are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Wire has no effect on the direction of Espey Mfg i.e., Espey Mfg and Asia Pacific go up and down completely randomly.
Pair Corralation between Espey Mfg and Asia Pacific
Considering the 90-day investment horizon Espey Mfg Electronics is expected to under-perform the Asia Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Espey Mfg Electronics is 1.17 times less risky than Asia Pacific. The stock trades about -0.01 of its potential returns per unit of risk. The Asia Pacific Wire is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 164.00 in Asia Pacific Wire on August 31, 2024 and sell it today you would earn a total of 30.00 from holding Asia Pacific Wire or generate 18.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Espey Mfg Electronics vs. Asia Pacific Wire
Performance |
| Timeline |
| Espey Mfg Electronics |
| Asia Pacific Wire |
Espey Mfg and Asia Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Espey Mfg and Asia Pacific
The main advantage of trading using opposite Espey Mfg and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific's long position.| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
| Asia Pacific vs. Tantalus Systems Holding | Asia Pacific vs. Hydrogen Engine Center | Asia Pacific vs. Alfen NV | Asia Pacific vs. Legrand SA ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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