Correlation Between Global Electrical and Innovative Technology
Can any of the company-specific risk be diversified away by investing in both Global Electrical and Innovative Technology 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 Global Electrical and Innovative Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Electrical Technology and Innovative Technology Development, you can compare the effects of market volatilities on Global Electrical and Innovative Technology 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 Global Electrical with a short position of Innovative Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Electrical and Innovative Technology.
Diversification Opportunities for Global Electrical and Innovative Technology
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Innovative is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global Electrical Technology and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology and Global Electrical 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 Global Electrical Technology are associated (or correlated) with Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of Global Electrical i.e., Global Electrical and Innovative Technology go up and down completely randomly.
Pair Corralation between Global Electrical and Innovative Technology
Assuming the 90 days trading horizon Global Electrical Technology is expected to under-perform the Innovative Technology. In addition to that, Global Electrical is 2.87 times more volatile than Innovative Technology Development. It trades about -0.1 of its total potential returns per unit of risk. Innovative Technology Development is currently generating about -0.12 per unit of volatility. If you would invest 1,390,000 in Innovative Technology Development on August 30, 2024 and sell it today you would lose (90,000) from holding Innovative Technology Development or give up 6.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 56.52% |
| Values | Daily Returns |
Global Electrical Technology vs. Innovative Technology Developm
Performance |
| Timeline |
| Global Electrical |
| Innovative Technology |
Global Electrical and Innovative Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Electrical and Innovative Technology
The main advantage of trading using opposite Global Electrical and Innovative Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Electrical position performs unexpectedly, Innovative Technology 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 Innovative Technology will offset losses from the drop in Innovative Technology's long position.| Global Electrical vs. PetroVietnam Transportation Corp | Global Electrical vs. Travel Investment and | Global Electrical vs. Nam Long Investment | Global Electrical vs. Ba Ria Thermal |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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