Correlation Between National Plastic and Coloray International
Can any of the company-specific risk be diversified away by investing in both National Plastic and Coloray International 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 Coloray International 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 Coloray International Investment, you can compare the effects of market volatilities on National Plastic and Coloray International 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 Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and Coloray International.
Diversification Opportunities for National Plastic and Coloray International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Coloray is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International 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 Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of National Plastic i.e., National Plastic and Coloray International go up and down completely randomly.
Pair Corralation between National Plastic and Coloray International
Assuming the 90 days trading horizon National Plastic Co is expected to generate 0.6 times more return on investment than Coloray International. However, National Plastic Co is 1.65 times less risky than Coloray International. It trades about -0.08 of its potential returns per unit of risk. Coloray International Investment is currently generating about -0.13 per unit of risk. If you would invest 260,000 in National Plastic Co on September 12, 2024 and sell it today you would lose (8,500) from holding National Plastic Co or give up 3.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Plastic Co vs. Coloray International Investme
Performance |
| Timeline |
| National Plastic |
| Coloray International |
National Plastic and Coloray International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and Coloray International
The main advantage of trading using opposite National Plastic and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, Coloray International 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 Coloray International will offset losses from the drop in Coloray International's long position.| National Plastic vs. Solution Advanced Technology | National Plastic vs. Busan Industrial Co | National Plastic vs. Busan Ind | National Plastic vs. Sam Chun Dang |
| Coloray International vs. Heungkuk Metaltech CoLtd | Coloray International vs. National Plastic Co | Coloray International vs. LS Materials | Coloray International vs. INNOX Advanced Materials |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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