Correlation Between ALFORMER Industrial and Pontex Polyblend
Can any of the company-specific risk be diversified away by investing in both ALFORMER Industrial and Pontex Polyblend 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 ALFORMER Industrial and Pontex Polyblend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALFORMER Industrial Co and Pontex Polyblend CoLtd, you can compare the effects of market volatilities on ALFORMER Industrial and Pontex Polyblend 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 ALFORMER Industrial with a short position of Pontex Polyblend. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALFORMER Industrial and Pontex Polyblend.
Diversification Opportunities for ALFORMER Industrial and Pontex Polyblend
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ALFORMER and Pontex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ALFORMER Industrial Co and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd and ALFORMER Industrial 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 ALFORMER Industrial Co are associated (or correlated) with Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of ALFORMER Industrial i.e., ALFORMER Industrial and Pontex Polyblend go up and down completely randomly.
Pair Corralation between ALFORMER Industrial and Pontex Polyblend
Assuming the 90 days trading horizon ALFORMER Industrial Co is expected to under-perform the Pontex Polyblend. In addition to that, ALFORMER Industrial is 1.56 times more volatile than Pontex Polyblend CoLtd. It trades about -0.05 of its total potential returns per unit of risk. Pontex Polyblend CoLtd is currently generating about 0.14 per unit of volatility. If you would invest 2,030 in Pontex Polyblend CoLtd on September 5, 2024 and sell it today you would earn a total of 205.00 from holding Pontex Polyblend CoLtd or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALFORMER Industrial Co vs. Pontex Polyblend CoLtd
Performance |
| Timeline |
| ALFORMER Industrial |
| Pontex Polyblend CoLtd |
ALFORMER Industrial and Pontex Polyblend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALFORMER Industrial and Pontex Polyblend
The main advantage of trading using opposite ALFORMER Industrial and Pontex Polyblend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALFORMER Industrial position performs unexpectedly, Pontex Polyblend 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 Pontex Polyblend will offset losses from the drop in Pontex Polyblend's long position.| ALFORMER Industrial vs. Hota Industrial Mfg | ALFORMER Industrial vs. Macauto Industrial Co | ALFORMER Industrial vs. Taiwan Fu Hsing | ALFORMER Industrial vs. Ruentex Development Co |
| Pontex Polyblend vs. Mechema Chemicals Int | Pontex Polyblend vs. HOYA Resort Hotel | Pontex Polyblend vs. Formosa International Hotels | Pontex Polyblend vs. Chailease Holding 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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