Correlation Between Excellence Optoelectronic and Ablerex Electronics

Can any of the company-specific risk be diversified away by investing in both Excellence Optoelectronic and Ablerex 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 Excellence Optoelectronic and Ablerex Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Excellence Optoelectronic and Ablerex Electronics Co, you can compare the effects of market volatilities on Excellence Optoelectronic and Ablerex 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 Excellence Optoelectronic with a short position of Ablerex Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellence Optoelectronic and Ablerex Electronics.

Diversification Opportunities for Excellence Optoelectronic and Ablerex Electronics

0.18

Correlation Coefficient

Excellence Optoelectronic  Ablerex Electronics

Average diversification

The 3 months correlation between Excellence and Ablerex is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Excellence Optoelectronic and Ablerex Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ablerex Electronics and Excellence Optoelectronic 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 Excellence Optoelectronic are associated (or correlated) with Ablerex Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ablerex Electronics has no effect on the direction of Excellence Optoelectronic i.e., Excellence Optoelectronic and Ablerex Electronics go up and down completely randomly.

Pair Corralation between Excellence Optoelectronic and Ablerex Electronics

Assuming the 90 days trading horizon Excellence Optoelectronic is expected to generate 1.42 times more return on investment than Ablerex Electronics. However, Excellence Optoelectronic is 1.42 times more volatile than Ablerex Electronics Co. It trades about 0.05 of its potential returns per unit of risk. Ablerex Electronics Co is currently generating about 0.06 per unit of risk. If you would invest  2,575  in Excellence Optoelectronic on September 15, 2024 and sell it today you would earn a total of  190.00  from holding Excellence Optoelectronic or generate 7.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Excellence Optoelectronic  vs.  Ablerex Electronics Co

Excellence Optoelectronic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Excellence Optoelectronic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Excellence Optoelectronic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ablerex Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ablerex Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ablerex Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Excellence Optoelectronic and Ablerex Electronics

The main advantage of trading using opposite Excellence Optoelectronic and Ablerex Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excellence Optoelectronic position performs unexpectedly, Ablerex 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 Ablerex Electronics will offset losses from the drop in Ablerex Electronics' long position.

The idea behind Excellence Optoelectronic and Ablerex Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..