Correlation Between Anderson Industrial and Awea Mechantronic

Can any of the company-specific risk be diversified away by investing in both Anderson Industrial and Awea Mechantronic 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 Awea Mechantronic 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 Awea Mechantronic Co, you can compare the effects of market volatilities on Anderson Industrial and Awea Mechantronic 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 Awea Mechantronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anderson Industrial and Awea Mechantronic.

Diversification Opportunities for Anderson Industrial and Awea Mechantronic

-0.06

Correlation Coefficient

Anderson Industrial  Awea Mechantronic

Good diversification

The 3 months correlation between Anderson and Awea is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Anderson Industrial Corp and Awea Mechantronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awea Mechantronic 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 Awea Mechantronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awea Mechantronic has no effect on the direction of Anderson Industrial i.e., Anderson Industrial and Awea Mechantronic go up and down completely randomly.

Pair Corralation between Anderson Industrial and Awea Mechantronic

Assuming the 90 days trading horizon Anderson Industrial Corp is expected to generate 2.44 times more return on investment than Awea Mechantronic. However, Anderson Industrial is 2.44 times more volatile than Awea Mechantronic Co. It trades about 0.04 of its potential returns per unit of risk. Awea Mechantronic Co is currently generating about -0.11 per unit of risk. If you would invest  1,435  in Anderson Industrial Corp on September 17, 2024 and sell it today you would earn a total of  75.00  from holding Anderson Industrial Corp or generate 5.23% return on investment over 90 days.

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

Anderson Industrial Corp  vs.  Awea Mechantronic Co

Anderson Industrial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anderson Industrial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Anderson Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Awea Mechantronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Awea Mechantronic Co 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.

Pair Trading with Anderson Industrial and Awea Mechantronic

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

The idea behind Anderson Industrial Corp and Awea Mechantronic 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.