Correlation Between World Technology and Singing Machine
Can any of the company-specific risk be diversified away by investing in both World Technology and Singing Machine 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 World Technology and Singing Machine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Technology Corp and The Singing Machine, you can compare the effects of market volatilities on World Technology and Singing Machine 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 World Technology with a short position of Singing Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Technology and Singing Machine.
Diversification Opportunities for World Technology and Singing Machine
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between World and Singing is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding World Technology Corp and The Singing Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singing Machine and World Technology 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 World Technology Corp are associated (or correlated) with Singing Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singing Machine has no effect on the direction of World Technology i.e., World Technology and Singing Machine go up and down completely randomly.
Pair Corralation between World Technology and Singing Machine
Given the investment horizon of 90 days World Technology Corp is expected to generate 1.69 times more return on investment than Singing Machine. However, World Technology is 1.69 times more volatile than The Singing Machine. It trades about 0.04 of its potential returns per unit of risk. The Singing Machine is currently generating about -0.03 per unit of risk. If you would invest 63.00 in World Technology Corp on September 3, 2024 and sell it today you would lose (29.00) from holding World Technology Corp or give up 46.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.41% |
| Values | Daily Returns |
World Technology Corp vs. The Singing Machine
Performance |
| Timeline |
| World Technology Corp |
| Singing Machine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
World Technology and Singing Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Technology and Singing Machine
The main advantage of trading using opposite World Technology and Singing Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Technology position performs unexpectedly, Singing Machine 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 Singing Machine will offset losses from the drop in Singing Machine's long position.| World Technology vs. Apple Inc | World Technology vs. Sharp | World Technology vs. TCL Electronics Holdings | World Technology vs. Xiaomi Corp |
| Singing Machine vs. Koss Corporation | Singing Machine vs. Emerson Radio | Singing Machine vs. Wearable Devices | Singing Machine vs. Zepp Health Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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