Correlation Between Allied Machinery and Masterwork Machinery
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By analyzing existing cross correlation between Allied Machinery Co and Masterwork Machinery, you can compare the effects of market volatilities on Allied Machinery and Masterwork Machinery 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 Machinery with a short position of Masterwork Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Machinery and Masterwork Machinery.
Diversification Opportunities for Allied Machinery and Masterwork Machinery
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allied and Masterwork is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Allied Machinery Co and Masterwork Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masterwork Machinery and Allied Machinery 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 Machinery Co are associated (or correlated) with Masterwork Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masterwork Machinery has no effect on the direction of Allied Machinery i.e., Allied Machinery and Masterwork Machinery go up and down completely randomly.
Pair Corralation between Allied Machinery and Masterwork Machinery
Assuming the 90 days trading horizon Allied Machinery Co is expected to under-perform the Masterwork Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Allied Machinery Co is 1.18 times less risky than Masterwork Machinery. The stock trades about -0.01 of its potential returns per unit of risk. The Masterwork Machinery is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 548.00 in Masterwork Machinery on October 9, 2024 and sell it today you would lose (34.00) from holding Masterwork Machinery or give up 6.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Allied Machinery Co vs. Masterwork Machinery
Performance |
Timeline |
Allied Machinery |
Masterwork Machinery |
Allied Machinery and Masterwork Machinery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allied Machinery and Masterwork Machinery
The main advantage of trading using opposite Allied Machinery and Masterwork Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Machinery position performs unexpectedly, Masterwork Machinery 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 Masterwork Machinery will offset losses from the drop in Masterwork Machinery's long position.Allied Machinery vs. Biwin Storage Technology | Allied Machinery vs. PetroChina Co Ltd | Allied Machinery vs. Industrial and Commercial | Allied Machinery vs. China Construction Bank |
Masterwork Machinery vs. Biwin Storage Technology | Masterwork Machinery vs. PetroChina Co Ltd | Masterwork Machinery vs. Industrial and Commercial | Masterwork Machinery vs. China Construction Bank |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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