Correlation Between Choil Aluminum and Next Bt
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Next Bt 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 Choil Aluminum and Next Bt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Next Bt Co, you can compare the effects of market volatilities on Choil Aluminum and Next Bt 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 Choil Aluminum with a short position of Next Bt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Next Bt.
Diversification Opportunities for Choil Aluminum and Next Bt
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choil and Next is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Next Bt Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Bt and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Next Bt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Bt has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Next Bt go up and down completely randomly.
Pair Corralation between Choil Aluminum and Next Bt
Assuming the 90 days trading horizon Choil Aluminum is expected to generate 0.76 times more return on investment than Next Bt. However, Choil Aluminum is 1.32 times less risky than Next Bt. It trades about -0.02 of its potential returns per unit of risk. Next Bt Co is currently generating about -0.04 per unit of risk. If you would invest 270,000 in Choil Aluminum on September 2, 2024 and sell it today you would lose (121,100) from holding Choil Aluminum or give up 44.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choil Aluminum vs. Next Bt Co
Performance |
| Timeline |
| Choil Aluminum |
| Next Bt |
Choil Aluminum and Next Bt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Next Bt
The main advantage of trading using opposite Choil Aluminum and Next Bt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Next Bt 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 Next Bt will offset losses from the drop in Next Bt's long position.| Choil Aluminum vs. Busan Industrial Co | Choil Aluminum vs. Busan Ind | Choil Aluminum vs. Mirae Asset Daewoo | Choil Aluminum vs. Finebesteel |
| Next Bt vs. Alton Sports CoLtd | Next Bt vs. Iljin Display | Next Bt vs. Choil Aluminum | Next Bt vs. QUALITAS SEMICONDUCTOR LTD |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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