Correlation Between Aten International and General Plastic
Can any of the company-specific risk be diversified away by investing in both Aten International and General 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 Aten International and General Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aten International Co and General Plastic Industrial, you can compare the effects of market volatilities on Aten International and General 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 Aten International with a short position of General Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aten International and General Plastic.
Diversification Opportunities for Aten International and General Plastic
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aten and General is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aten International Co and General Plastic Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Plastic Indu and Aten International 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 Aten International Co are associated (or correlated) with General Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Plastic Indu has no effect on the direction of Aten International i.e., Aten International and General Plastic go up and down completely randomly.
Pair Corralation between Aten International and General Plastic
Assuming the 90 days trading horizon Aten International Co is expected to under-perform the General Plastic. In addition to that, Aten International is 1.44 times more volatile than General Plastic Industrial. It trades about -0.06 of its total potential returns per unit of risk. General Plastic Industrial is currently generating about 0.13 per unit of volatility. If you would invest 3,395 in General Plastic Industrial on November 4, 2024 and sell it today you would earn a total of 25.00 from holding General Plastic Industrial or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aten International Co vs. General Plastic Industrial
Performance |
| Timeline |
| Aten International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| General Plastic Indu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aten International and General Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aten International and General Plastic
The main advantage of trading using opposite Aten International and General Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aten International position performs unexpectedly, General 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 General Plastic will offset losses from the drop in General Plastic's long position.The idea behind Aten International Co and General Plastic Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |