Correlation Between Magnate Technology and STARLUX Airlines
Can any of the company-specific risk be diversified away by investing in both Magnate Technology and STARLUX Airlines 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 Magnate Technology and STARLUX Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnate Technology Co and STARLUX Airlines Co, you can compare the effects of market volatilities on Magnate Technology and STARLUX Airlines 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 Magnate Technology with a short position of STARLUX Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnate Technology and STARLUX Airlines.
Diversification Opportunities for Magnate Technology and STARLUX Airlines
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magnate and STARLUX is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Magnate Technology Co and STARLUX Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARLUX Airlines and Magnate 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 Magnate Technology Co are associated (or correlated) with STARLUX Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STARLUX Airlines has no effect on the direction of Magnate Technology i.e., Magnate Technology and STARLUX Airlines go up and down completely randomly.
Pair Corralation between Magnate Technology and STARLUX Airlines
Assuming the 90 days trading horizon Magnate Technology Co is expected to generate 1.66 times more return on investment than STARLUX Airlines. However, Magnate Technology is 1.66 times more volatile than STARLUX Airlines Co. It trades about 0.17 of its potential returns per unit of risk. STARLUX Airlines Co is currently generating about 0.01 per unit of risk. If you would invest 2,695 in Magnate Technology Co on September 18, 2024 and sell it today you would earn a total of 815.00 from holding Magnate Technology Co or generate 30.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Magnate Technology Co vs. STARLUX Airlines Co
Performance |
Timeline |
Magnate Technology |
STARLUX Airlines |
Magnate Technology and STARLUX Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magnate Technology and STARLUX Airlines
The main advantage of trading using opposite Magnate Technology and STARLUX Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnate Technology position performs unexpectedly, STARLUX Airlines 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 STARLUX Airlines will offset losses from the drop in STARLUX Airlines' long position.Magnate Technology vs. STARLUX Airlines Co | Magnate Technology vs. Dawushan Farm Tech | Magnate Technology vs. Da Cin Construction Co | Magnate Technology vs. Pacific Construction 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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