Correlation Between ABCO Electronics and Atinum Investment
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and Atinum Investment 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 ABCO Electronics and Atinum Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and Atinum Investment Co, you can compare the effects of market volatilities on ABCO Electronics and Atinum Investment 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 ABCO Electronics with a short position of Atinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Atinum Investment.
Diversification Opportunities for ABCO Electronics and Atinum Investment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ABCO and Atinum is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Atinum Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atinum Investment and ABCO Electronics 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 ABCO Electronics Co are associated (or correlated) with Atinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atinum Investment has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and Atinum Investment go up and down completely randomly.
Pair Corralation between ABCO Electronics and Atinum Investment
Assuming the 90 days trading horizon ABCO Electronics Co is expected to under-perform the Atinum Investment. But the stock apears to be less risky and, when comparing its historical volatility, ABCO Electronics Co is 1.15 times less risky than Atinum Investment. The stock trades about -0.13 of its potential returns per unit of risk. The Atinum Investment Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 239,000 in Atinum Investment Co on September 23, 2024 and sell it today you would lose (20,000) from holding Atinum Investment Co or give up 8.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ABCO Electronics Co vs. Atinum Investment Co
Performance |
Timeline |
ABCO Electronics |
Atinum Investment |
ABCO Electronics and Atinum Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ABCO Electronics and Atinum Investment
The main advantage of trading using opposite ABCO Electronics and Atinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, Atinum Investment 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 Atinum Investment will offset losses from the drop in Atinum Investment's long position.ABCO Electronics vs. Dongsin Engineering Construction | ABCO Electronics vs. Doosan Fuel Cell | ABCO Electronics vs. Daishin Balance 1 | ABCO Electronics vs. Total Soft Bank |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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