Correlation Between ALERION CLEANPOWER and COMMERCIAL VEHICLE
Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER and COMMERCIAL VEHICLE 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 ALERION CLEANPOWER and COMMERCIAL VEHICLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALERION CLEANPOWER and COMMERCIAL VEHICLE, you can compare the effects of market volatilities on ALERION CLEANPOWER and COMMERCIAL VEHICLE 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 ALERION CLEANPOWER with a short position of COMMERCIAL VEHICLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and COMMERCIAL VEHICLE.
Diversification Opportunities for ALERION CLEANPOWER and COMMERCIAL VEHICLE
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ALERION and COMMERCIAL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and COMMERCIAL VEHICLE go up and down completely randomly.
Pair Corralation between ALERION CLEANPOWER and COMMERCIAL VEHICLE
Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to generate 0.42 times more return on investment than COMMERCIAL VEHICLE. However, ALERION CLEANPOWER is 2.36 times less risky than COMMERCIAL VEHICLE. It trades about -0.3 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.16 per unit of risk. If you would invest 1,492 in ALERION CLEANPOWER on November 28, 2024 and sell it today you would lose (132.00) from holding ALERION CLEANPOWER or give up 8.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ALERION CLEANPOWER vs. COMMERCIAL VEHICLE
Performance |
| Timeline |
| ALERION CLEANPOWER |
| COMMERCIAL VEHICLE |
ALERION CLEANPOWER and COMMERCIAL VEHICLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALERION CLEANPOWER and COMMERCIAL VEHICLE
The main advantage of trading using opposite ALERION CLEANPOWER and COMMERCIAL VEHICLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER position performs unexpectedly, COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE will offset losses from the drop in COMMERCIAL VEHICLE's long position.| ALERION CLEANPOWER vs. REINET INVESTMENTS SCA | ALERION CLEANPOWER vs. PennantPark Investment | ALERION CLEANPOWER vs. Computer And Technologies | ALERION CLEANPOWER vs. ASM Pacific Technology |
| COMMERCIAL VEHICLE vs. Tradegate AG Wertpapierhandelsbank | COMMERCIAL VEHICLE vs. FLOW TRADERS LTD | COMMERCIAL VEHICLE vs. RETAIL FOOD GROUP | COMMERCIAL VEHICLE vs. STMICROELECTRONICS |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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