Correlation Between Next Bt and Coloray International
Can any of the company-specific risk be diversified away by investing in both Next Bt 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 Next Bt and Coloray International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Bt Co and Coloray International Investment, you can compare the effects of market volatilities on Next Bt 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 Next Bt with a short position of Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Bt and Coloray International.
Diversification Opportunities for Next Bt and Coloray International
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Next and Coloray is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Next Bt 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 Next Bt 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 Next Bt 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 Next Bt i.e., Next Bt and Coloray International go up and down completely randomly.
Pair Corralation between Next Bt and Coloray International
Assuming the 90 days trading horizon Next Bt Co is expected to under-perform the Coloray International. In addition to that, Next Bt is 1.63 times more volatile than Coloray International Investment. It trades about -0.18 of its total potential returns per unit of risk. Coloray International Investment is currently generating about 0.09 per unit of volatility. If you would invest 59,000 in Coloray International Investment on November 3, 2024 and sell it today you would earn a total of 17,700 from holding Coloray International Investment or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.07% |
| Values | Daily Returns |
Next Bt Co vs. Coloray International Investme
Performance |
| Timeline |
| Next Bt |
| Coloray International |
Next Bt and Coloray International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Bt and Coloray International
The main advantage of trading using opposite Next Bt and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Bt 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.| Next Bt vs. Hyundai Motor | Next Bt vs. Solution Advanced Technology | Next Bt vs. Busan Industrial Co | Next Bt vs. Busan Ind |
| Coloray International vs. Lotte Data Communication | Coloray International vs. Korea Computer | Coloray International vs. CG Hi Tech | Coloray International vs. Sangsin Energy Display |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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