Correlation Between Asia Polymer and Taita Chemical
Can any of the company-specific risk be diversified away by investing in both Asia Polymer and Taita Chemical 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 Asia Polymer and Taita Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Polymer Corp and Taita Chemical Co, you can compare the effects of market volatilities on Asia Polymer and Taita Chemical 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 Asia Polymer with a short position of Taita Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Polymer and Taita Chemical.
Diversification Opportunities for Asia Polymer and Taita Chemical
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asia and Taita is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Asia Polymer Corp and Taita Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taita Chemical and Asia Polymer 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 Asia Polymer Corp are associated (or correlated) with Taita Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taita Chemical has no effect on the direction of Asia Polymer i.e., Asia Polymer and Taita Chemical go up and down completely randomly.
Pair Corralation between Asia Polymer and Taita Chemical
Assuming the 90 days trading horizon Asia Polymer Corp is expected to generate 1.04 times more return on investment than Taita Chemical. However, Asia Polymer is 1.04 times more volatile than Taita Chemical Co. It trades about 0.1 of its potential returns per unit of risk. Taita Chemical Co is currently generating about -0.13 per unit of risk. If you would invest 1,385 in Asia Polymer Corp on October 23, 2024 and sell it today you would earn a total of 60.00 from holding Asia Polymer Corp or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Polymer Corp vs. Taita Chemical Co
Performance |
| Timeline |
| Asia Polymer Corp |
| Taita Chemical |
Asia Polymer and Taita Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Polymer and Taita Chemical
The main advantage of trading using opposite Asia Polymer and Taita Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Polymer position performs unexpectedly, Taita Chemical 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 Taita Chemical will offset losses from the drop in Taita Chemical's long position.| Asia Polymer vs. Cathay Real Estate | Asia Polymer vs. Huaku Development Co | Asia Polymer vs. BES Engineering Co | Asia Polymer vs. Prince Housing Development |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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