Correlation Between Awea Mechantronic and Anderson Industrial

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

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

Diversification Opportunities for Awea Mechantronic and Anderson Industrial

-0.06

Correlation Coefficient

Awea Mechantronic  Anderson Industrial

Good diversification

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

Pair Corralation between Awea Mechantronic and Anderson Industrial

Assuming the 90 days trading horizon Awea Mechantronic Co is expected to under-perform the Anderson Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Awea Mechantronic Co is 2.44 times less risky than Anderson Industrial. The stock trades about -0.11 of its potential returns per unit of risk. The Anderson Industrial Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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

Awea Mechantronic Co  vs.  Anderson Industrial Corp

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.

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.

Pair Trading with Awea Mechantronic and Anderson Industrial

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

The idea behind Awea Mechantronic Co and Anderson 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.