Correlation Between A Tech and National Plastic
Can any of the company-specific risk be diversified away by investing in both A Tech 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 A Tech and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Tech Solution Co and National Plastic Co, you can compare the effects of market volatilities on A Tech 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 A Tech with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of A Tech and National Plastic.
Diversification Opportunities for A Tech and National Plastic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 071670 and National is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and A Tech 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 A Tech Solution Co 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 A Tech i.e., A Tech and National Plastic go up and down completely randomly.
Pair Corralation between A Tech and National Plastic
Assuming the 90 days trading horizon A Tech Solution Co is expected to under-perform the National Plastic. In addition to that, A Tech is 1.94 times more volatile than National Plastic Co. It trades about -0.02 of its total potential returns per unit of risk. National Plastic Co is currently generating about -0.03 per unit of volatility. If you would invest 331,040 in National Plastic Co on September 3, 2024 and sell it today you would lose (71,040) from holding National Plastic Co or give up 21.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
A Tech Solution Co vs. National Plastic Co
Performance |
| Timeline |
| A Tech Solution |
| National Plastic |
A Tech and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A Tech and National Plastic
The main advantage of trading using opposite A Tech and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Tech 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.| A Tech vs. National Plastic Co | A Tech vs. ECSTELECOM Co | A Tech vs. Green Cross Medical | A Tech vs. Phoenix Materials Co |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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