Correlation Between 2S Metal and President Automobile
Can any of the company-specific risk be diversified away by investing in both 2S Metal and President Automobile 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 2S Metal and President Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2S Metal Public and President Automobile Industries, you can compare the effects of market volatilities on 2S Metal and President Automobile 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 2S Metal with a short position of President Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and President Automobile.
Diversification Opportunities for 2S Metal and President Automobile
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2S Metal and President is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and President Automobile Industrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Automobile and 2S Metal 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 2S Metal Public are associated (or correlated) with President Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Automobile has no effect on the direction of 2S Metal i.e., 2S Metal and President Automobile go up and down completely randomly.
Pair Corralation between 2S Metal and President Automobile
Assuming the 90 days horizon 2S Metal Public is expected to under-perform the President Automobile. But the stock apears to be less risky and, when comparing its historical volatility, 2S Metal Public is 1.03 times less risky than President Automobile. The stock trades about -0.16 of its potential returns per unit of risk. The President Automobile Industries is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 147.00 in President Automobile Industries on September 1, 2024 and sell it today you would lose (7.00) from holding President Automobile Industries or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
2S Metal Public vs. President Automobile Industrie
Performance |
| Timeline |
| 2S Metal Public |
| President Automobile |
2S Metal and President Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2S Metal and President Automobile
The main advantage of trading using opposite 2S Metal and President Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, President Automobile 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 President Automobile will offset losses from the drop in President Automobile's long position.| 2S Metal vs. Diamond Building Products | 2S Metal vs. MCS Steel Public | 2S Metal vs. Asia Green Energy | 2S Metal vs. Hwa Fong Rubber |
| President Automobile vs. Phol Dhanya Public | President Automobile vs. PTT Oil and | President Automobile vs. Pico Public | President Automobile vs. Pioneer Motor Public |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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