Correlation Between AOYAMA TRADING and Applied Materials
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING and Applied Materials 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 AOYAMA TRADING and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and Applied Materials, you can compare the effects of market volatilities on AOYAMA TRADING and Applied Materials 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 AOYAMA TRADING with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and Applied Materials.
Diversification Opportunities for AOYAMA TRADING and Applied Materials
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AOYAMA and Applied is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and Applied Materials go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and Applied Materials
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 2.3 times more return on investment than Applied Materials. However, AOYAMA TRADING is 2.3 times more volatile than Applied Materials. It trades about 0.08 of its potential returns per unit of risk. Applied Materials is currently generating about 0.04 per unit of risk. If you would invest 566.00 in AOYAMA TRADING on October 24, 2024 and sell it today you would earn a total of 774.00 from holding AOYAMA TRADING or generate 136.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AOYAMA TRADING vs. Applied Materials
Performance |
Timeline |
AOYAMA TRADING |
Applied Materials |
AOYAMA TRADING and Applied Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AOYAMA TRADING and Applied Materials
The main advantage of trading using opposite AOYAMA TRADING and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.AOYAMA TRADING vs. CVS Health | AOYAMA TRADING vs. RCI Hospitality Holdings | AOYAMA TRADING vs. SOCKET MOBILE NEW | AOYAMA TRADING vs. OPKO HEALTH |
Applied Materials vs. SPORT LISBOA E | Applied Materials vs. SCIENCE IN SPORT | Applied Materials vs. TOREX SEMICONDUCTOR LTD | Applied Materials vs. COLUMBIA SPORTSWEAR |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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