Correlation Between 05329RAA1 and Marine Products

Can any of the company-specific risk be diversified away by investing in both 05329RAA1 and Marine Products 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 05329RAA1 and Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AN 385 01 MAR 32 and Marine Products, you can compare the effects of market volatilities on 05329RAA1 and Marine Products 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 05329RAA1 with a short position of Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of 05329RAA1 and Marine Products.

Diversification Opportunities for 05329RAA1 and Marine Products

-0.36

Correlation Coefficient

05329RAA1  Marine Products

Very good diversification

The 3 months correlation between 05329RAA1 and Marine is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AN 385 01 MAR 32 and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products and 05329RAA1 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 AN 385 01 MAR 32 are associated (or correlated) with Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of 05329RAA1 i.e., 05329RAA1 and Marine Products go up and down completely randomly.

Pair Corralation between 05329RAA1 and Marine Products

Assuming the 90 days trading horizon AN 385 01 MAR 32 is expected to generate 0.22 times more return on investment than Marine Products. However, AN 385 01 MAR 32 is 4.62 times less risky than Marine Products. It trades about 0.08 of its potential returns per unit of risk. Marine Products is currently generating about -0.06 per unit of risk. If you would invest  8,952  in AN 385 01 MAR 32 on December 24, 2024 and sell it today you would earn a total of  191.00  from holding AN 385 01 MAR 32 or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

AN 385 01 MAR 32  vs.  Marine Products

AN 385 01

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AN 385 01 MAR 32 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 05329RAA1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Marine Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with 05329RAA1 and Marine Products

The main advantage of trading using opposite 05329RAA1 and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 05329RAA1 position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.

The idea behind AN 385 01 MAR 32 and Marine Products 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.