Correlation Between TRADELINK ELECTRON and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both TRADELINK ELECTRON and AUTO TRADER 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 TRADELINK ELECTRON and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADELINK ELECTRON and AUTO TRADER ADR, you can compare the effects of market volatilities on TRADELINK ELECTRON and AUTO TRADER 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 TRADELINK ELECTRON with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADELINK ELECTRON and AUTO TRADER.
Diversification Opportunities for TRADELINK ELECTRON and AUTO TRADER
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TRADELINK and AUTO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TRADELINK ELECTRON and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and TRADELINK ELECTRON 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 TRADELINK ELECTRON are associated (or correlated) with AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of TRADELINK ELECTRON i.e., TRADELINK ELECTRON and AUTO TRADER go up and down completely randomly.
Pair Corralation between TRADELINK ELECTRON and AUTO TRADER
Assuming the 90 days trading horizon TRADELINK ELECTRON is expected to generate 3.21 times more return on investment than AUTO TRADER. However, TRADELINK ELECTRON is 3.21 times more volatile than AUTO TRADER ADR. It trades about 0.1 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about -0.07 per unit of risk. If you would invest 7.45 in TRADELINK ELECTRON on November 2, 2024 and sell it today you would earn a total of 3.55 from holding TRADELINK ELECTRON or generate 47.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRADELINK ELECTRON vs. AUTO TRADER ADR
Performance |
| Timeline |
| TRADELINK ELECTRON |
| AUTO TRADER ADR |
TRADELINK ELECTRON and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADELINK ELECTRON and AUTO TRADER
The main advantage of trading using opposite TRADELINK ELECTRON and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADELINK ELECTRON position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| TRADELINK ELECTRON vs. MTY Food Group | TRADELINK ELECTRON vs. TreeHouse Foods | TRADELINK ELECTRON vs. Costco Wholesale Corp | TRADELINK ELECTRON vs. SPARTAN STORES |
| AUTO TRADER vs. Alphabet Class A | AUTO TRADER vs. Meta Platforms | AUTO TRADER vs. Tencent Holdings Ltd | AUTO TRADER vs. Tencent Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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