Correlation Between Friedman Industries and Aperam PK
Can any of the company-specific risk be diversified away by investing in both Friedman Industries and Aperam PK 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 Friedman Industries and Aperam PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Friedman Industries and Aperam PK, you can compare the effects of market volatilities on Friedman Industries and Aperam PK 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 Friedman Industries with a short position of Aperam PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Friedman Industries and Aperam PK.
Diversification Opportunities for Friedman Industries and Aperam PK
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Friedman and Aperam is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Friedman Industries and Aperam PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam PK and Friedman Industries 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 Friedman Industries are associated (or correlated) with Aperam PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam PK has no effect on the direction of Friedman Industries i.e., Friedman Industries and Aperam PK go up and down completely randomly.
Pair Corralation between Friedman Industries and Aperam PK
Considering the 90-day investment horizon Friedman Industries is expected to under-perform the Aperam PK. In addition to that, Friedman Industries is 1.01 times more volatile than Aperam PK. It trades about -0.08 of its total potential returns per unit of risk. Aperam PK is currently generating about 0.05 per unit of volatility. If you would invest 2,900 in Aperam PK on August 24, 2024 and sell it today you would earn a total of 66.00 from holding Aperam PK or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Friedman Industries vs. Aperam PK
Performance |
| Timeline |
| Friedman Industries |
| Aperam PK |
Friedman Industries and Aperam PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Friedman Industries and Aperam PK
The main advantage of trading using opposite Friedman Industries and Aperam PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Friedman Industries position performs unexpectedly, Aperam PK 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 Aperam PK will offset losses from the drop in Aperam PK's long position.| Friedman Industries vs. Aperam PK | Friedman Industries vs. Acerinox SA ADR | Friedman Industries vs. Algoma Steel Group | Friedman Industries vs. Ferrexpo PLC |
| Aperam PK vs. Algoma Steel Group | Aperam PK vs. Kumba Iron Ore | Aperam PK vs. Synalloy | Aperam PK vs. Acerinox 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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