Correlation Between STI and Cloud Air
Can any of the company-specific risk be diversified away by investing in both STI and Cloud Air 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 STI and Cloud Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STI Co and Cloud Air CoLtd, you can compare the effects of market volatilities on STI and Cloud Air 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 STI with a short position of Cloud Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of STI and Cloud Air.
Diversification Opportunities for STI and Cloud Air
Poor diversification
The 3 months correlation between STI and Cloud is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding STI Co and Cloud Air CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Air CoLtd and STI 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 STI Co are associated (or correlated) with Cloud Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Air CoLtd has no effect on the direction of STI i.e., STI and Cloud Air go up and down completely randomly.
Pair Corralation between STI and Cloud Air
Assuming the 90 days trading horizon STI Co is expected to under-perform the Cloud Air. In addition to that, STI is 2.07 times more volatile than Cloud Air CoLtd. It trades about -0.51 of its total potential returns per unit of risk. Cloud Air CoLtd is currently generating about -0.01 per unit of volatility. If you would invest 86,300 in Cloud Air CoLtd on September 2, 2024 and sell it today you would lose (400.00) from holding Cloud Air CoLtd or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STI Co vs. Cloud Air CoLtd
Performance |
| Timeline |
| STI Co |
| Cloud Air CoLtd |
STI and Cloud Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STI and Cloud Air
The main advantage of trading using opposite STI and Cloud Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STI position performs unexpectedly, Cloud Air 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 Cloud Air will offset losses from the drop in Cloud Air's long position.| STI vs. Dongsin Engineering Construction | STI vs. Doosan Fuel Cell | STI vs. Daishin Balance 1 | STI vs. Total Soft Bank |
| Cloud Air vs. SK Hynix | Cloud Air vs. LX Semicon Co | Cloud Air vs. People Technology | Cloud Air vs. SIMMTECH Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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