Correlation Between Cub Elecparts and Actron Technology

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

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

Diversification Opportunities for Cub Elecparts and Actron Technology

-0.25

Correlation Coefficient

Cub Elecparts  Actron Technology

Very good diversification

The 3 months correlation between Cub and Actron is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cub Elecparts and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron Technology and Cub Elecparts 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 Cub Elecparts are associated (or correlated) with Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of Cub Elecparts i.e., Cub Elecparts and Actron Technology go up and down completely randomly.

Pair Corralation between Cub Elecparts and Actron Technology

Assuming the 90 days trading horizon Cub Elecparts is expected to under-perform the Actron Technology. But the stock apears to be less risky and, when comparing its historical volatility, Cub Elecparts is 1.1 times less risky than Actron Technology. The stock trades about -0.03 of its potential returns per unit of risk. The Actron Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15,623  in Actron Technology on September 23, 2024 and sell it today you would lose (373.00) from holding Actron Technology or give up 2.39% of portfolio value over 90 days.

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

Cub Elecparts  vs.  Actron Technology

Cub Elecparts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cub Elecparts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Cub Elecparts is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Actron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Actron Technology 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 Cub Elecparts and Actron Technology

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

The idea behind Cub Elecparts and Actron Technology 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.