Correlation Between Growthpoint Properties and Allied Electronics
Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties and Allied Electronics 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 Growthpoint Properties and Allied Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and Allied Electronics, you can compare the effects of market volatilities on Growthpoint Properties and Allied Electronics 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 Growthpoint Properties with a short position of Allied Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and Allied Electronics.
Diversification Opportunities for Growthpoint Properties and Allied Electronics
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Growthpoint and Allied is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Allied Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Electronics and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Allied Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Electronics has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Allied Electronics go up and down completely randomly.
Pair Corralation between Growthpoint Properties and Allied Electronics
Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 4.59 times less return on investment than Allied Electronics. But when comparing it to its historical volatility, Growthpoint Properties is 1.75 times less risky than Allied Electronics. It trades about 0.03 of its potential returns per unit of risk. Allied Electronics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 90,976 in Allied Electronics on August 27, 2024 and sell it today you would earn a total of 107,524 from holding Allied Electronics or generate 118.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growthpoint Properties vs. Allied Electronics
Performance |
| Timeline |
| Growthpoint Properties |
| Allied Electronics |
Growthpoint Properties and Allied Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growthpoint Properties and Allied Electronics
The main advantage of trading using opposite Growthpoint Properties and Allied Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties position performs unexpectedly, Allied Electronics 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 Allied Electronics will offset losses from the drop in Allied Electronics' long position.| Growthpoint Properties vs. Blue Label Telecoms | Growthpoint Properties vs. Harmony Gold Mining | Growthpoint Properties vs. HomeChoice Investments | Growthpoint Properties vs. City Lodge Hotels |
| Allied Electronics vs. Ayo Technology Solutions | Allied Electronics vs. Centaur Bci Balanced | Allied Electronics vs. Growthpoint Properties | Allied Electronics vs. Bowler Metcalf |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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