Correlation Between Jiangsu Expressway and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Jiangsu Expressway and Arrow 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 Jiangsu Expressway and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jiangsu Expressway and Arrow Electronics, you can compare the effects of market volatilities on Jiangsu Expressway and Arrow 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 Jiangsu Expressway with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Expressway and Arrow Electronics.
Diversification Opportunities for Jiangsu Expressway and Arrow Electronics
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jiangsu and Arrow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Expressway and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Jiangsu Expressway 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 Jiangsu Expressway are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Jiangsu Expressway i.e., Jiangsu Expressway and Arrow Electronics go up and down completely randomly.
Pair Corralation between Jiangsu Expressway and Arrow Electronics
Assuming the 90 days horizon Jiangsu Expressway is expected to under-perform the Arrow Electronics. In addition to that, Jiangsu Expressway is 1.55 times more volatile than Arrow Electronics. It trades about -0.22 of its total potential returns per unit of risk. Arrow Electronics is currently generating about -0.02 per unit of volatility. If you would invest 12,103 in Arrow Electronics on September 2, 2024 and sell it today you would lose (87.00) from holding Arrow Electronics or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiangsu Expressway vs. Arrow Electronics
Performance |
| Timeline |
| Jiangsu Expressway |
| Arrow Electronics |
Jiangsu Expressway and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiangsu Expressway and Arrow Electronics
The main advantage of trading using opposite Jiangsu Expressway and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu Expressway position performs unexpectedly, Arrow 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Jiangsu Expressway vs. Arrow Electronics | Jiangsu Expressway vs. Supercom | Jiangsu Expressway vs. Playtech plc | Jiangsu Expressway vs. WT Offshore |
| Arrow Electronics vs. Avnet Inc | Arrow Electronics vs. Synnex | Arrow Electronics vs. Ingram Micro Holding | Arrow Electronics vs. Insight Enterprises |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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