Correlation Between Prime Oil and Cypress Technology
Can any of the company-specific risk be diversified away by investing in both Prime Oil and Cypress Technology 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 Prime Oil and Cypress Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Oil Chemical and Cypress Technology Co, you can compare the effects of market volatilities on Prime Oil and Cypress Technology 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 Prime Oil with a short position of Cypress Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Oil and Cypress Technology.
Diversification Opportunities for Prime Oil and Cypress Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prime and Cypress is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Prime Oil Chemical and Cypress Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cypress Technology and Prime Oil 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 Prime Oil Chemical are associated (or correlated) with Cypress Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cypress Technology has no effect on the direction of Prime Oil i.e., Prime Oil and Cypress Technology go up and down completely randomly.
Pair Corralation between Prime Oil and Cypress Technology
Assuming the 90 days trading horizon Prime Oil Chemical is expected to generate 0.46 times more return on investment than Cypress Technology. However, Prime Oil Chemical is 2.18 times less risky than Cypress Technology. It trades about -0.04 of its potential returns per unit of risk. Cypress Technology Co is currently generating about -0.06 per unit of risk. If you would invest 1,855 in Prime Oil Chemical on October 26, 2024 and sell it today you would lose (70.00) from holding Prime Oil Chemical or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Oil Chemical vs. Cypress Technology Co
Performance |
| Timeline |
| Prime Oil Chemical |
| Cypress Technology |
Prime Oil and Cypress Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Oil and Cypress Technology
The main advantage of trading using opposite Prime Oil and Cypress Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Oil position performs unexpectedly, Cypress Technology 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 Cypress Technology will offset losses from the drop in Cypress Technology's long position.| Prime Oil vs. President Chain Store | Prime Oil vs. Huaku Development Co | Prime Oil vs. Formosa International Hotels | Prime Oil vs. Mercuries Associates Holding |
| Cypress Technology vs. Prime Oil Chemical | Cypress Technology vs. Acelon Chemicals Fiber | Cypress Technology vs. Thye Ming Industrial | Cypress Technology vs. Yi Jinn Industrial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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