Correlation Between Innovative Technology and Transport
Can any of the company-specific risk be diversified away by investing in both Innovative Technology and Transport 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 Transport 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 Transport and Industry, you can compare the effects of market volatilities on Innovative Technology and Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Technology and Transport.
Diversification Opportunities for Innovative Technology and Transport
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innovative and Transport is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Technology Developm and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of Innovative Technology i.e., Innovative Technology and Transport go up and down completely randomly.
Pair Corralation between Innovative Technology and Transport
Assuming the 90 days trading horizon Innovative Technology Development is expected to generate 1.22 times more return on investment than Transport. However, Innovative Technology is 1.22 times more volatile than Transport and Industry. It trades about -0.09 of its potential returns per unit of risk. Transport and Industry is currently generating about -0.21 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 | 100.0% |
| Values | Daily Returns |
Innovative Technology Developm vs. Transport and Industry
Performance |
| Timeline |
| Innovative Technology |
| Transport and Industry |
Innovative Technology and Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Technology and Transport
The main advantage of trading using opposite Innovative Technology and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Technology position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport'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 |
| Transport vs. Tienlen Steel Corp | Transport vs. PVI Reinsurance Corp | Transport vs. Vietnam National Reinsurance | Transport vs. CEO Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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