Correlation Between Optimax Technology and Action Electronics
Can any of the company-specific risk be diversified away by investing in both Optimax Technology and Action Electronics 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 Optimax Technology and Action Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimax Technology Corp and Action Electronics Co, you can compare the effects of market volatilities on Optimax Technology and Action Electronics 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 Optimax Technology with a short position of Action Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimax Technology and Action Electronics.
Diversification Opportunities for Optimax Technology and Action Electronics
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Optimax and Action is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Optimax Technology Corp and Action Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Action Electronics and Optimax Technology 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 Optimax Technology Corp are associated (or correlated) with Action Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Action Electronics has no effect on the direction of Optimax Technology i.e., Optimax Technology and Action Electronics go up and down completely randomly.
Pair Corralation between Optimax Technology and Action Electronics
Assuming the 90 days trading horizon Optimax Technology Corp is expected to generate 0.81 times more return on investment than Action Electronics. However, Optimax Technology Corp is 1.23 times less risky than Action Electronics. It trades about -0.04 of its potential returns per unit of risk. Action Electronics Co is currently generating about -0.1 per unit of risk. If you would invest 3,150 in Optimax Technology Corp on November 21, 2024 and sell it today you would lose (160.00) from holding Optimax Technology Corp or give up 5.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Optimax Technology Corp vs. Action Electronics Co
Performance |
Timeline |
Optimax Technology Corp |
Action Electronics |
Optimax Technology and Action Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Optimax Technology and Action Electronics
The main advantage of trading using opposite Optimax Technology and Action Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimax Technology position performs unexpectedly, Action Electronics 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 Action Electronics will offset losses from the drop in Action Electronics' long position.Optimax Technology vs. Asia Optical Co | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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