Correlation Between Cots Technology and Pungguk Ethanol
Can any of the company-specific risk be diversified away by investing in both Cots Technology and Pungguk Ethanol 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 Cots Technology and Pungguk Ethanol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cots Technology Co and Pungguk Ethanol Industrial, you can compare the effects of market volatilities on Cots Technology and Pungguk Ethanol 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 Cots Technology with a short position of Pungguk Ethanol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cots Technology and Pungguk Ethanol.
Diversification Opportunities for Cots Technology and Pungguk Ethanol
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cots and Pungguk is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cots Technology Co and Pungguk Ethanol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pungguk Ethanol Indu and Cots Technology 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 Cots Technology Co are associated (or correlated) with Pungguk Ethanol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pungguk Ethanol Indu has no effect on the direction of Cots Technology i.e., Cots Technology and Pungguk Ethanol go up and down completely randomly.
Pair Corralation between Cots Technology and Pungguk Ethanol
Assuming the 90 days trading horizon Cots Technology Co is expected to under-perform the Pungguk Ethanol. In addition to that, Cots Technology is 2.75 times more volatile than Pungguk Ethanol Industrial. It trades about -0.04 of its total potential returns per unit of risk. Pungguk Ethanol Industrial is currently generating about -0.08 per unit of volatility. If you would invest 1,208,000 in Pungguk Ethanol Industrial on September 3, 2024 and sell it today you would lose (221,000) from holding Pungguk Ethanol Industrial or give up 18.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cots Technology Co vs. Pungguk Ethanol Industrial
Performance |
| Timeline |
| Cots Technology |
| Pungguk Ethanol Indu |
Cots Technology and Pungguk Ethanol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cots Technology and Pungguk Ethanol
The main advantage of trading using opposite Cots Technology and Pungguk Ethanol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cots Technology position performs unexpectedly, Pungguk Ethanol 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 Pungguk Ethanol will offset losses from the drop in Pungguk Ethanol's long position.| Cots Technology vs. Samsung Electronics Co | Cots Technology vs. Samsung Electronics Co | Cots Technology vs. LG Energy Solution | Cots Technology vs. SK Hynix |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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