Correlation Between 2S Metal and Pacific Pipe
Can any of the company-specific risk be diversified away by investing in both 2S Metal and Pacific Pipe 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 Pacific Pipe 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 Pacific Pipe Public, you can compare the effects of market volatilities on 2S Metal and Pacific Pipe 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 Pacific Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and Pacific Pipe.
Diversification Opportunities for 2S Metal and Pacific Pipe
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 2S Metal and Pacific is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and Pacific Pipe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Pipe Public 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 Pacific Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Pipe Public has no effect on the direction of 2S Metal i.e., 2S Metal and Pacific Pipe go up and down completely randomly.
Pair Corralation between 2S Metal and Pacific Pipe
Assuming the 90 days horizon 2S Metal Public is expected to generate 0.33 times more return on investment than Pacific Pipe. However, 2S Metal Public is 3.01 times less risky than Pacific Pipe. It trades about -0.05 of its potential returns per unit of risk. Pacific Pipe Public is currently generating about -0.04 per unit of risk. If you would invest 301.00 in 2S Metal Public on September 1, 2024 and sell it today you would lose (23.00) from holding 2S Metal Public or give up 7.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
2S Metal Public vs. Pacific Pipe Public
Performance |
| Timeline |
| 2S Metal Public |
| Pacific Pipe Public |
2S Metal and Pacific Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2S Metal and Pacific Pipe
The main advantage of trading using opposite 2S Metal and Pacific Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, Pacific Pipe 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 Pacific Pipe will offset losses from the drop in Pacific Pipe'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 |
| Pacific Pipe vs. TMT Steel Public | Pacific Pipe vs. MCS Steel Public | Pacific Pipe vs. KGI Securities Public | Pacific Pipe vs. Permsin Steel Works |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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