Correlation Between Asia Optical and Cipherlab
Can any of the company-specific risk be diversified away by investing in both Asia Optical and Cipherlab 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 Asia Optical and Cipherlab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Optical Co and Cipherlab Co, you can compare the effects of market volatilities on Asia Optical and Cipherlab 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 Asia Optical with a short position of Cipherlab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Optical and Cipherlab.
Diversification Opportunities for Asia Optical and Cipherlab
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and Cipherlab is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Asia Optical Co and Cipherlab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipherlab and Asia Optical 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 Asia Optical Co are associated (or correlated) with Cipherlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipherlab has no effect on the direction of Asia Optical i.e., Asia Optical and Cipherlab go up and down completely randomly.
Pair Corralation between Asia Optical and Cipherlab
Assuming the 90 days trading horizon Asia Optical Co is expected to generate 2.32 times more return on investment than Cipherlab. However, Asia Optical is 2.32 times more volatile than Cipherlab Co. It trades about 0.49 of its potential returns per unit of risk. Cipherlab Co is currently generating about -0.12 per unit of risk. If you would invest 11,300 in Asia Optical Co on September 25, 2024 and sell it today you would earn a total of 5,550 from holding Asia Optical Co or generate 49.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Asia Optical Co vs. Cipherlab Co
Performance |
Timeline |
Asia Optical |
Cipherlab |
Asia Optical and Cipherlab Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asia Optical and Cipherlab
The main advantage of trading using opposite Asia Optical and Cipherlab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Optical position performs unexpectedly, Cipherlab 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 Cipherlab will offset losses from the drop in Cipherlab's long position.Asia Optical vs. Century Wind Power | Asia Optical vs. Green World Fintech | Asia Optical vs. Ingentec | Asia Optical vs. Chaheng Precision Co |
Cipherlab vs. GeoVision | Cipherlab vs. Flytech Technology Co | Cipherlab vs. Quanta Storage | Cipherlab vs. Coretronic |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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