Correlation Between Basic Materials and A1KA34
Can any of the company-specific risk be diversified away by investing in both Basic Materials and A1KA34 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 Basic Materials and A1KA34 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and A1KA34, you can compare the effects of market volatilities on Basic Materials and A1KA34 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 Basic Materials with a short position of A1KA34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and A1KA34.
Diversification Opportunities for Basic Materials and A1KA34
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Basic and A1KA34 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and A1KA34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1KA34 and Basic Materials 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 Basic Materials are associated (or correlated) with A1KA34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1KA34 has no effect on the direction of Basic Materials i.e., Basic Materials and A1KA34 go up and down completely randomly.
Pair Corralation between Basic Materials and A1KA34
Assuming the 90 days trading horizon Basic Materials is expected to generate 3.98 times less return on investment than A1KA34. But when comparing it to its historical volatility, Basic Materials is 1.43 times less risky than A1KA34. It trades about 0.01 of its potential returns per unit of risk. A1KA34 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,879 in A1KA34 on September 13, 2024 and sell it today you would earn a total of 1,011 from holding A1KA34 or generate 26.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Basic Materials vs. A1KA34
Performance |
| Timeline |
Basic Materials and A1KA34 Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
A1KA34
Pair trading matchups for A1KA34
Pair Trading with Basic Materials and A1KA34
The main advantage of trading using opposite Basic Materials and A1KA34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, A1KA34 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 A1KA34 will offset losses from the drop in A1KA34's long position.| Basic Materials vs. Micron Technology | Basic Materials vs. T Mobile | Basic Materials vs. Beyond Meat | Basic Materials vs. Verizon Communications |
| A1KA34 vs. The Home Depot | A1KA34 vs. Tres Tentos Agroindustrial | A1KA34 vs. salesforce inc | A1KA34 vs. Apartment Investment and |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges |