Correlation Between RF Materials and National Plastic
Can any of the company-specific risk be diversified away by investing in both RF Materials and National Plastic 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 RF Materials and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RF Materials Co and National Plastic Co, you can compare the effects of market volatilities on RF Materials and National Plastic 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 RF Materials with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Materials and National Plastic.
Diversification Opportunities for RF Materials and National Plastic
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 327260 and National is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding RF Materials Co and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and RF Materials 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 RF Materials Co are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of RF Materials i.e., RF Materials and National Plastic go up and down completely randomly.
Pair Corralation between RF Materials and National Plastic
Assuming the 90 days trading horizon RF Materials Co is expected to under-perform the National Plastic. In addition to that, RF Materials is 2.7 times more volatile than National Plastic Co. It trades about -0.06 of its total potential returns per unit of risk. National Plastic Co is currently generating about -0.04 per unit of volatility. If you would invest 283,000 in National Plastic Co on October 20, 2024 and sell it today you would lose (32,500) from holding National Plastic Co or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RF Materials Co vs. National Plastic Co
Performance |
| Timeline |
| RF Materials |
| National Plastic |
RF Materials and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RF Materials and National Plastic
The main advantage of trading using opposite RF Materials and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Materials position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| RF Materials vs. Ssangyong Information Communication | RF Materials vs. A Tech Solution Co | RF Materials vs. Narae Nanotech Corp | RF Materials vs. Nice Information Telecommunication |
| National Plastic vs. Koh Young Technology | National Plastic vs. A Tech Solution Co | National Plastic vs. Amogreentech Co | National Plastic vs. Yura Tech Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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