Correlation Between Okins Electronics and National Plastic
Can any of the company-specific risk be diversified away by investing in both Okins Electronics 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 Okins Electronics and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okins Electronics Co and National Plastic Co, you can compare the effects of market volatilities on Okins Electronics 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 Okins Electronics with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okins Electronics and National Plastic.
Diversification Opportunities for Okins Electronics and National Plastic
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okins and National is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Okins Electronics 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 Okins Electronics 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 Okins Electronics 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 Okins Electronics i.e., Okins Electronics and National Plastic go up and down completely randomly.
Pair Corralation between Okins Electronics and National Plastic
Assuming the 90 days trading horizon Okins Electronics Co is expected to under-perform the National Plastic. In addition to that, Okins Electronics is 1.24 times more volatile than National Plastic Co. It trades about -0.53 of its total potential returns per unit of risk. National Plastic Co is currently generating about -0.11 per unit of volatility. If you would invest 271,500 in National Plastic Co on August 29, 2024 and sell it today you would lose (10,500) from holding National Plastic Co or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okins Electronics Co vs. National Plastic Co
Performance |
| Timeline |
| Okins Electronics |
| National Plastic |
Okins Electronics and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okins Electronics and National Plastic
The main advantage of trading using opposite Okins Electronics and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okins Electronics 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.| Okins Electronics vs. Daou Data Corp | Okins Electronics vs. Busan Industrial Co | Okins Electronics vs. Busan Ind | Okins Electronics vs. Shinhan WTI Futures |
| National Plastic vs. Busan Industrial Co | National Plastic vs. Busan Ind | National Plastic vs. Shinhan WTI Futures | National Plastic vs. Finebesteel |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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