Correlation Between Microequities Asset and Autosports

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

By analyzing existing cross correlation between Microequities Asset Management and Autosports Group, you can compare the effects of market volatilities on Microequities Asset and Autosports 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 Microequities Asset with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microequities Asset and Autosports.

Diversification Opportunities for Microequities Asset and Autosports

-0.36

Correlation Coefficient

Microequities Asset  Autosports

Very good diversification

The 3 months correlation between Microequities and Autosports is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microequities Asset Management and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Microequities Asset 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 Microequities Asset Management are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Microequities Asset i.e., Microequities Asset and Autosports go up and down completely randomly.

Pair Corralation between Microequities Asset and Autosports

Assuming the 90 days trading horizon Microequities Asset Management is expected to under-perform the Autosports. In addition to that, Microequities Asset is 1.01 times more volatile than Autosports Group. It trades about -0.05 of its total potential returns per unit of risk. Autosports Group is currently generating about 0.22 per unit of volatility. If you would invest  167.00  in Autosports Group on December 5, 2024 and sell it today you would earn a total of  20.00  from holding Autosports Group or generate 11.98% return on investment over 90 days.

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

Microequities Asset Management  vs.  Autosports Group

Microequities Asset

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microequities Asset Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Microequities Asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Autosports Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autosports Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Autosports is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Microequities Asset and Autosports

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

The idea behind Microequities Asset Management and Autosports Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.