Correlation Between National Plastic and Clean Science
Can any of the company-specific risk be diversified away by investing in both National Plastic and Clean Science 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 National Plastic and Clean Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and Clean Science co, you can compare the effects of market volatilities on National Plastic and Clean Science 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 National Plastic with a short position of Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and Clean Science.
Diversification Opportunities for National Plastic and Clean Science
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Clean is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co and National Plastic 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 National Plastic Co are associated (or correlated) with Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of National Plastic i.e., National Plastic and Clean Science go up and down completely randomly.
Pair Corralation between National Plastic and Clean Science
Assuming the 90 days trading horizon National Plastic Co is expected to generate 0.58 times more return on investment than Clean Science. However, National Plastic Co is 1.72 times less risky than Clean Science. It trades about -0.05 of its potential returns per unit of risk. Clean Science co is currently generating about -0.07 per unit of risk. If you would invest 349,431 in National Plastic Co on October 28, 2024 and sell it today you would lose (103,431) from holding National Plastic Co or give up 29.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Plastic Co vs. Clean Science co
Performance |
| Timeline |
| National Plastic |
| Clean Science co |
National Plastic and Clean Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and Clean Science
The main advantage of trading using opposite National Plastic and Clean Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, Clean Science 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 Clean Science will offset losses from the drop in Clean Science's long position.| National Plastic vs. HYBE Co | National Plastic vs. Busan Industrial Co | National Plastic vs. Busan Ind | National Plastic vs. Mirae Asset Daewoo |
| Clean Science vs. Nam Hwa Construction | Clean Science vs. Hotel Shilla Co | Clean Science vs. Seohee Construction Co | Clean Science vs. Kolon Plastics |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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