Correlation Between Sofwave Medical and Automatic Bank
Can any of the company-specific risk be diversified away by investing in both Sofwave Medical and Automatic Bank 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 Sofwave Medical and Automatic Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofwave Medical and Automatic Bank Services, you can compare the effects of market volatilities on Sofwave Medical and Automatic Bank 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 Sofwave Medical with a short position of Automatic Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofwave Medical and Automatic Bank.
Diversification Opportunities for Sofwave Medical and Automatic Bank
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sofwave and Automatic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services and Sofwave Medical 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 Sofwave Medical are associated (or correlated) with Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of Sofwave Medical i.e., Sofwave Medical and Automatic Bank go up and down completely randomly.
Pair Corralation between Sofwave Medical and Automatic Bank
Assuming the 90 days trading horizon Sofwave Medical is expected to under-perform the Automatic Bank. In addition to that, Sofwave Medical is 1.47 times more volatile than Automatic Bank Services. It trades about -0.11 of its total potential returns per unit of risk. Automatic Bank Services is currently generating about 0.7 per unit of volatility. If you would invest 243,600 in Automatic Bank Services on November 27, 2024 and sell it today you would earn a total of 57,500 from holding Automatic Bank Services or generate 23.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sofwave Medical vs. Automatic Bank Services
Performance |
| Timeline |
| Sofwave Medical |
| Automatic Bank Services |
Sofwave Medical and Automatic Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofwave Medical and Automatic Bank
The main advantage of trading using opposite Sofwave Medical and Automatic Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofwave Medical position performs unexpectedly, Automatic Bank 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 Automatic Bank will offset losses from the drop in Automatic Bank's long position.| Sofwave Medical vs. Tower Semiconductor | Sofwave Medical vs. Teuza A Fairchild | Sofwave Medical vs. Discount Investment Corp | Sofwave Medical vs. Azorim Investment Development |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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