Correlation Between Allied Electronics and Brait SE
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and Brait SE 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 Electronics and Brait SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and Brait SE, you can compare the effects of market volatilities on Allied Electronics and Brait SE 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 Electronics with a short position of Brait SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and Brait SE.
Diversification Opportunities for Allied Electronics and Brait SE
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Allied and Brait is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and Brait SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brait SE and Allied Electronics 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 Electronics are associated (or correlated) with Brait SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brait SE has no effect on the direction of Allied Electronics i.e., Allied Electronics and Brait SE go up and down completely randomly.
Pair Corralation between Allied Electronics and Brait SE
Assuming the 90 days trading horizon Allied Electronics is expected to generate 0.78 times more return on investment than Brait SE. However, Allied Electronics is 1.27 times less risky than Brait SE. It trades about 0.08 of its potential returns per unit of risk. Brait SE is currently generating about -0.03 per unit of risk. If you would invest 89,976 in Allied Electronics on September 23, 2024 and sell it today you would earn a total of 123,024 from holding Allied Electronics or generate 136.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Allied Electronics vs. Brait SE
Performance |
Timeline |
Allied Electronics |
Brait SE |
Allied Electronics and Brait SE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allied Electronics and Brait SE
The main advantage of trading using opposite Allied Electronics and Brait SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, Brait SE 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 Brait SE will offset losses from the drop in Brait SE's long position.Allied Electronics vs. Ayo Technology Solutions | Allied Electronics vs. Alexander Forbes Grp | Allied Electronics vs. Brait SE | Allied Electronics vs. Discovery Holdings |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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