Correlation Between Allied Industrial and Neo Neon
Can any of the company-specific risk be diversified away by investing in both Allied Industrial and Neo Neon 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 Allied Industrial and Neo Neon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Industrial and Neo Neon Holdings Limited, you can compare the effects of market volatilities on Allied Industrial and Neo Neon 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 Allied Industrial with a short position of Neo Neon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Industrial and Neo Neon.
Diversification Opportunities for Allied Industrial and Neo Neon
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Allied and Neo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Allied Industrial and Neo Neon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Neon Holdings and Allied Industrial 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 Allied Industrial are associated (or correlated) with Neo Neon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Neon Holdings has no effect on the direction of Allied Industrial i.e., Allied Industrial and Neo Neon go up and down completely randomly.
Pair Corralation between Allied Industrial and Neo Neon
Assuming the 90 days trading horizon Allied Industrial is expected to under-perform the Neo Neon. But the stock apears to be less risky and, when comparing its historical volatility, Allied Industrial is 2.6 times less risky than Neo Neon. The stock trades about -0.06 of its potential returns per unit of risk. The Neo Neon Holdings Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Neo Neon Holdings Limited on September 15, 2024 and sell it today you would earn a total of 0.00 from holding Neo Neon Holdings Limited or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Allied Industrial vs. Neo Neon Holdings Limited
Performance |
Timeline |
Allied Industrial |
Neo Neon Holdings |
Allied Industrial and Neo Neon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allied Industrial and Neo Neon
The main advantage of trading using opposite Allied Industrial and Neo Neon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Industrial position performs unexpectedly, Neo Neon 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 Neo Neon will offset losses from the drop in Neo Neon's long position.Allied Industrial vs. Wha Yu Industrial | Allied Industrial vs. Taiwan Chinsan Electronic | Allied Industrial vs. Song Ho Industrial | Allied Industrial vs. C Media Electronics |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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