Correlation Between Software Acquisition and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both Software Acquisition and Maanshan Iron 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 Software Acquisition and Maanshan Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Acquisition Group and Maanshan Iron Steel, you can compare the effects of market volatilities on Software Acquisition and Maanshan Iron 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 Software Acquisition with a short position of Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Acquisition and Maanshan Iron.
Diversification Opportunities for Software Acquisition and Maanshan Iron
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Software and Maanshan is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and Maanshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maanshan Iron Steel and Software Acquisition 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 Software Acquisition Group are associated (or correlated) with Maanshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maanshan Iron Steel has no effect on the direction of Software Acquisition i.e., Software Acquisition and Maanshan Iron go up and down completely randomly.
Pair Corralation between Software Acquisition and Maanshan Iron
Given the investment horizon of 90 days Software Acquisition Group is expected to generate 0.51 times more return on investment than Maanshan Iron. However, Software Acquisition Group is 1.95 times less risky than Maanshan Iron. It trades about 0.11 of its potential returns per unit of risk. Maanshan Iron Steel is currently generating about -0.22 per unit of risk. If you would invest 109.00 in Software Acquisition Group on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Software Acquisition Group or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Software Acquisition Group vs. Maanshan Iron Steel
Performance |
| Timeline |
| Software Acquisition |
| Maanshan Iron Steel |
Software Acquisition and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Acquisition and Maanshan Iron
The main advantage of trading using opposite Software Acquisition and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition position performs unexpectedly, Maanshan Iron 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 Maanshan Iron will offset losses from the drop in Maanshan Iron's long position.| Software Acquisition vs. Oatly Group AB | Software Acquisition vs. Westrock Coffee | Software Acquisition vs. Volaris | Software Acquisition vs. Seadrill Limited |
| Maanshan Iron vs. Ta Chen Stainless | Maanshan Iron vs. Gerdau SA | Maanshan Iron vs. Gerdau SA | Maanshan Iron vs. Nucor Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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