Correlation Between Ambarella and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Ambarella and Park Electrochemical 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 Ambarella and Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambarella and Park Electrochemical, you can compare the effects of market volatilities on Ambarella and Park Electrochemical 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 Ambarella with a short position of Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambarella and Park Electrochemical.
Diversification Opportunities for Ambarella and Park Electrochemical
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ambarella and Park is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ambarella and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and Ambarella 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 Ambarella are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Ambarella i.e., Ambarella and Park Electrochemical go up and down completely randomly.
Pair Corralation between Ambarella and Park Electrochemical
Given the investment horizon of 90 days Ambarella is expected to under-perform the Park Electrochemical. In addition to that, Ambarella is 1.52 times more volatile than Park Electrochemical. It trades about -0.09 of its total potential returns per unit of risk. Park Electrochemical is currently generating about 0.01 per unit of volatility. If you would invest 1,468 in Park Electrochemical on January 24, 2024 and sell it today you would earn a total of 29.00 from holding Park Electrochemical or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambarella vs. Park Electrochemical
Performance |
| Timeline |
| Ambarella |
| Park Electrochemical |
Ambarella and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambarella and Park Electrochemical
The main advantage of trading using opposite Ambarella and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambarella position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.The idea behind Ambarella and Park Electrochemical 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.| Park Electrochemical vs. Novocure | Park Electrochemical vs. HubSpot | Park Electrochemical vs. DigitalOcean Holdings | Park Electrochemical vs. Appian Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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