Correlation Between Mobile Appliance and Raontech

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Can any of the company-specific risk be diversified away by investing in both Mobile Appliance and Raontech 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 Mobile Appliance and Raontech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mobile Appliance and Raontech, you can compare the effects of market volatilities on Mobile Appliance and Raontech 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 Mobile Appliance with a short position of Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobile Appliance and Raontech.

Diversification Opportunities for Mobile Appliance and Raontech

MobileRaontechDiversified AwayMobileRaontechDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Mobile and Raontech is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Appliance and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech and Mobile Appliance 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 Mobile Appliance are associated (or correlated) with Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of Mobile Appliance i.e., Mobile Appliance and Raontech go up and down completely randomly.

Pair Corralation between Mobile Appliance and Raontech

Assuming the 90 days trading horizon Mobile Appliance is expected to under-perform the Raontech. But the stock apears to be less risky and, when comparing its historical volatility, Mobile Appliance is 1.16 times less risky than Raontech. The stock trades about -0.1 of its potential returns per unit of risk. The Raontech is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  429,000  in Raontech on September 28, 2024 and sell it today you would lose (65,500) from holding Raontech or give up 15.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Mobile Appliance  vs.  Raontech

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -30-20-1001020
JavaScript chart by amCharts 3.21.15087260 418420
       Timeline  
Mobile Appliance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mobile Appliance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1,8002,0002,2002,4002,6002,800
Raontech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Raontech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2,5003,0003,5004,0004,5005,000

Mobile Appliance and Raontech Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.45-4.08-2.71-1.34-0.02061.212.453.694.92 0.0250.0300.035
JavaScript chart by amCharts 3.21.15087260 418420
       Returns  

Pair Trading with Mobile Appliance and Raontech

The main advantage of trading using opposite Mobile Appliance and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobile Appliance position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.
The idea behind Mobile Appliance and Raontech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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