Correlation Between Innovative Technology and Global Electrical
Can any of the company-specific risk be diversified away by investing in both Innovative Technology and Global Electrical 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 Innovative Technology and Global Electrical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Technology Development and Global Electrical Technology, you can compare the effects of market volatilities on Innovative Technology and Global Electrical 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 Innovative Technology with a short position of Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Technology and Global Electrical.
Diversification Opportunities for Innovative Technology and Global Electrical
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innovative and Global is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Technology Developm and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical and Innovative 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 Innovative Technology Development are associated (or correlated) with Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Innovative Technology i.e., Innovative Technology and Global Electrical go up and down completely randomly.
Pair Corralation between Innovative Technology and Global Electrical
Assuming the 90 days trading horizon Innovative Technology Development is expected to generate 0.39 times more return on investment than Global Electrical. However, Innovative Technology Development is 2.53 times less risky than Global Electrical. It trades about -0.09 of its potential returns per unit of risk. Global Electrical Technology is currently generating about -0.05 per unit of risk. If you would invest 1,390,000 in Innovative Technology Development on September 2, 2024 and sell it today you would lose (70,000) from holding Innovative Technology Development or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 54.55% |
| Values | Daily Returns |
Innovative Technology Developm vs. Global Electrical Technology
Performance |
| Timeline |
| Innovative Technology |
| Global Electrical |
Innovative Technology and Global Electrical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Technology and Global Electrical
The main advantage of trading using opposite Innovative Technology and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Technology position performs unexpectedly, Global Electrical 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 Global Electrical will offset losses from the drop in Global Electrical's long position.| Innovative Technology vs. Saigon Viendong Technology | Innovative Technology vs. Techcom Vietnam REIT | Innovative Technology vs. Sea Air Freight | Innovative Technology vs. Century Synthetic Fiber |
| Global Electrical vs. DOMESCO Medical Import | Global Electrical vs. Binh Duong Trade | Global Electrical vs. Petrovietnam Technical Services | Global Electrical vs. VTC Telecommunications JSC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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