Correlation Between Total Soft and National Plastic
Can any of the company-specific risk be diversified away by investing in both Total Soft and National Plastic 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 Total Soft and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and National Plastic Co, you can compare the effects of market volatilities on Total Soft and National Plastic 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 Total Soft with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and National Plastic.
Diversification Opportunities for Total Soft and National Plastic
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Total and National is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and Total Soft 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 Total Soft Bank are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of Total Soft i.e., Total Soft and National Plastic go up and down completely randomly.
Pair Corralation between Total Soft and National Plastic
Assuming the 90 days trading horizon Total Soft Bank is expected to generate 2.13 times more return on investment than National Plastic. However, Total Soft is 2.13 times more volatile than National Plastic Co. It trades about 0.02 of its potential returns per unit of risk. National Plastic Co is currently generating about -0.03 per unit of risk. If you would invest 435,000 in Total Soft Bank on September 3, 2024 and sell it today you would earn a total of 33,000 from holding Total Soft Bank or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. National Plastic Co
Performance |
| Timeline |
| Total Soft Bank |
| National Plastic |
Total Soft and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and National Plastic
The main advantage of trading using opposite Total Soft and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| Total Soft vs. Hanmi Semiconductor Co | Total Soft vs. Iljin Display | Total Soft vs. Dongbang Transport Logistics | Total Soft vs. Daol Investment Securities |
| National Plastic vs. ITM Semiconductor Co | National Plastic vs. KakaoBank Corp | National Plastic vs. Total Soft Bank | National Plastic vs. Samsung Life Insurance |
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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