Correlation Between Min Aik and Castles Technology

Can any of the company-specific risk be diversified away by investing in both Min Aik and Castles Technology 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 Min Aik and Castles Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Min Aik Technology and Castles Technology Co, you can compare the effects of market volatilities on Min Aik and Castles Technology 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 Min Aik with a short position of Castles Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Castles Technology.

Diversification Opportunities for Min Aik and Castles Technology

0.76

Correlation Coefficient

Min Aik  Castles Technology

Poor diversification

The 3 months correlation between Min and Castles is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Castles Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castles Technology and Min Aik 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 Min Aik Technology are associated (or correlated) with Castles Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castles Technology has no effect on the direction of Min Aik i.e., Min Aik and Castles Technology go up and down completely randomly.

Pair Corralation between Min Aik and Castles Technology

Assuming the 90 days trading horizon Min Aik Technology is expected to generate 0.87 times more return on investment than Castles Technology. However, Min Aik Technology is 1.15 times less risky than Castles Technology. It trades about -0.04 of its potential returns per unit of risk. Castles Technology Co is currently generating about -0.24 per unit of risk. If you would invest  2,600  in Min Aik Technology on September 21, 2024 and sell it today you would lose (220.00) from holding Min Aik Technology or give up 8.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Min Aik Technology  vs.  Castles Technology Co

Min Aik Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Min Aik Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Castles Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castles Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Min Aik and Castles Technology

The main advantage of trading using opposite Min Aik and Castles Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Min Aik position performs unexpectedly, Castles Technology 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 Castles Technology will offset losses from the drop in Castles Technology's long position.

The idea behind Min Aik Technology and Castles Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .