Correlation Between Roundtop Machinery and Asia Polymer
Can any of the company-specific risk be diversified away by investing in both Roundtop Machinery and Asia Polymer 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 Roundtop Machinery and Asia Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundtop Machinery Industries and Asia Polymer Corp, you can compare the effects of market volatilities on Roundtop Machinery and Asia Polymer 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 Roundtop Machinery with a short position of Asia Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundtop Machinery and Asia Polymer.
Diversification Opportunities for Roundtop Machinery and Asia Polymer
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Roundtop and Asia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Roundtop Machinery Industries and Asia Polymer Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Polymer Corp and Roundtop Machinery 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 Roundtop Machinery Industries are associated (or correlated) with Asia Polymer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Polymer Corp has no effect on the direction of Roundtop Machinery i.e., Roundtop Machinery and Asia Polymer go up and down completely randomly.
Pair Corralation between Roundtop Machinery and Asia Polymer
Assuming the 90 days trading horizon Roundtop Machinery Industries is expected to generate 1.72 times more return on investment than Asia Polymer. However, Roundtop Machinery is 1.72 times more volatile than Asia Polymer Corp. It trades about 0.38 of its potential returns per unit of risk. Asia Polymer Corp is currently generating about 0.13 per unit of risk. If you would invest 3,105 in Roundtop Machinery Industries on November 28, 2024 and sell it today you would earn a total of 885.00 from holding Roundtop Machinery Industries or generate 28.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roundtop Machinery Industries vs. Asia Polymer Corp
Performance |
| Timeline |
| Roundtop Machinery |
| Asia Polymer Corp |
Roundtop Machinery and Asia Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundtop Machinery and Asia Polymer
The main advantage of trading using opposite Roundtop Machinery and Asia Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundtop Machinery position performs unexpectedly, Asia Polymer 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 Asia Polymer will offset losses from the drop in Asia Polymer's long position.| Roundtop Machinery vs. Awea Mechantronic Co | Roundtop Machinery vs. Anderson Industrial Corp | Roundtop Machinery vs. Kaulin Mfg | Roundtop Machinery vs. Lee Chi Enterprises |
| Asia Polymer vs. USI Corp | Asia Polymer vs. Taiwan Styrene Monomer | Asia Polymer vs. UPC Technology Corp | Asia Polymer vs. Grand Pacific Petrochemical |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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