Correlation Between Anderson Industrial and Rexon Industrial

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

By analyzing existing cross correlation between Anderson Industrial Corp and Rexon Industrial Corp, you can compare the effects of market volatilities on Anderson Industrial and Rexon Industrial 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 Anderson Industrial with a short position of Rexon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anderson Industrial and Rexon Industrial.

Diversification Opportunities for Anderson Industrial and Rexon Industrial

0.86

Correlation Coefficient

Anderson Industrial  Rexon Industrial

Very poor diversification

The 3 months correlation between Anderson and Rexon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Anderson Industrial Corp and Rexon Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexon Industrial Corp and Anderson Industrial 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 Anderson Industrial Corp are associated (or correlated) with Rexon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexon Industrial Corp has no effect on the direction of Anderson Industrial i.e., Anderson Industrial and Rexon Industrial go up and down completely randomly.

Pair Corralation between Anderson Industrial and Rexon Industrial

Assuming the 90 days trading horizon Anderson Industrial Corp is expected to generate 1.74 times more return on investment than Rexon Industrial. However, Anderson Industrial is 1.74 times more volatile than Rexon Industrial Corp. It trades about 0.08 of its potential returns per unit of risk. Rexon Industrial Corp is currently generating about 0.11 per unit of risk. If you would invest  1,450  in Anderson Industrial Corp on December 30, 2024 and sell it today you would earn a total of  160.00  from holding Anderson Industrial Corp or generate 11.03% return on investment over 90 days.

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

Anderson Industrial Corp  vs.  Rexon Industrial Corp

Anderson Industrial Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anderson Industrial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Anderson Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Rexon Industrial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rexon Industrial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rexon Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Anderson Industrial and Rexon Industrial

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

The idea behind Anderson Industrial Corp and Rexon Industrial Corp 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.