Correlation Between Ecoplastic and Next Bt
Can any of the company-specific risk be diversified away by investing in both Ecoplastic 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 Ecoplastic and Next Bt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecoplastic and Next Bt Co, you can compare the effects of market volatilities on Ecoplastic 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 Ecoplastic with a short position of Next Bt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecoplastic and Next Bt.
Diversification Opportunities for Ecoplastic and Next Bt
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ecoplastic and Next is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ecoplastic and Next Bt Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Bt and Ecoplastic 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 Ecoplastic 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 Ecoplastic i.e., Ecoplastic and Next Bt go up and down completely randomly.
Pair Corralation between Ecoplastic and Next Bt
Assuming the 90 days trading horizon Ecoplastic is expected to generate 0.66 times more return on investment than Next Bt. However, Ecoplastic is 1.52 times less risky than Next Bt. It trades about -0.44 of its potential returns per unit of risk. Next Bt Co is currently generating about -0.35 per unit of risk. If you would invest 281,500 in Ecoplastic on September 4, 2024 and sell it today you would lose (49,500) from holding Ecoplastic or give up 17.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecoplastic vs. Next Bt Co
Performance |
| Timeline |
| Ecoplastic |
| Next Bt |
Ecoplastic and Next Bt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecoplastic and Next Bt
The main advantage of trading using opposite Ecoplastic and Next Bt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecoplastic 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.| Ecoplastic vs. Korea Real Estate | Ecoplastic vs. Busan Industrial Co | Ecoplastic vs. UNISEM Co | Ecoplastic vs. RPBio Inc |
| Next Bt vs. Hyundai Engineering Plastics | Next Bt vs. RF Materials Co | Next Bt vs. Ecoplastic | Next Bt vs. TOPMATERIAL 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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