Correlation Between Tokyo Electron and Aterian
Can any of the company-specific risk be diversified away by investing in both Tokyo Electron and Aterian 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 Tokyo Electron and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Electron and Aterian, you can compare the effects of market volatilities on Tokyo Electron and Aterian 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 Tokyo Electron with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electron and Aterian.
Diversification Opportunities for Tokyo Electron and Aterian
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tokyo and Aterian is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Tokyo 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 Tokyo Electron are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Tokyo Electron i.e., Tokyo Electron and Aterian go up and down completely randomly.
Pair Corralation between Tokyo Electron and Aterian
Assuming the 90 days horizon Tokyo Electron is expected to generate 0.56 times more return on investment than Aterian. However, Tokyo Electron is 1.78 times less risky than Aterian. It trades about 0.03 of its potential returns per unit of risk. Aterian is currently generating about -0.03 per unit of risk. If you would invest 11,148 in Tokyo Electron on November 29, 2024 and sell it today you would earn a total of 3,700 from holding Tokyo Electron or generate 33.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Tokyo Electron vs. Aterian
Performance |
| Timeline |
| Tokyo Electron |
| Aterian |
Tokyo Electron and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyo Electron and Aterian
The main advantage of trading using opposite Tokyo Electron and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Electron position performs unexpectedly, Aterian 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 Aterian will offset losses from the drop in Aterian's long position.| Tokyo Electron vs. Westrock Coffee | Tokyo Electron vs. Perseus Mining Limited | Tokyo Electron vs. Titan America SA | Tokyo Electron vs. Keurig Dr Pepper |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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