Correlation Between Kuraray and Altech Batteries
Can any of the company-specific risk be diversified away by investing in both Kuraray and Altech Batteries 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 Kuraray and Altech Batteries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuraray Co and Altech Batteries Limited, you can compare the effects of market volatilities on Kuraray and Altech Batteries 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 Kuraray with a short position of Altech Batteries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuraray and Altech Batteries.
Diversification Opportunities for Kuraray and Altech Batteries
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kuraray and Altech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kuraray Co and Altech Batteries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altech Batteries and Kuraray 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 Kuraray Co are associated (or correlated) with Altech Batteries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altech Batteries has no effect on the direction of Kuraray i.e., Kuraray and Altech Batteries go up and down completely randomly.
Pair Corralation between Kuraray and Altech Batteries
Assuming the 90 days horizon Kuraray Co is expected to generate 0.52 times more return on investment than Altech Batteries. However, Kuraray Co is 1.92 times less risky than Altech Batteries. It trades about -0.01 of its potential returns per unit of risk. Altech Batteries Limited is currently generating about -0.08 per unit of risk. If you would invest 4,600 in Kuraray Co on November 3, 2024 and sell it today you would lose (76.00) from holding Kuraray Co or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kuraray Co vs. Altech Batteries Limited
Performance |
| Timeline |
| Kuraray |
| Altech Batteries |
Kuraray and Altech Batteries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuraray and Altech Batteries
The main advantage of trading using opposite Kuraray and Altech Batteries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuraray position performs unexpectedly, Altech Batteries 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 Altech Batteries will offset losses from the drop in Altech Batteries' long position.The idea behind Kuraray Co and Altech Batteries Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Altech Batteries vs. Nexstar Broadcasting Group | Altech Batteries vs. Mattel Inc | Altech Batteries vs. Hollywood Intermediate | Altech Batteries vs. Mediag3 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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