Correlation Between Coloray International and Lindeman Asia
Can any of the company-specific risk be diversified away by investing in both Coloray International and Lindeman Asia 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 Coloray International and Lindeman Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloray International Investment and Lindeman Asia Investment, you can compare the effects of market volatilities on Coloray International and Lindeman Asia 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 Coloray International with a short position of Lindeman Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Lindeman Asia.
Diversification Opportunities for Coloray International and Lindeman Asia
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coloray and Lindeman is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Lindeman Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindeman Asia Investment and Coloray 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 Coloray International Investment are associated (or correlated) with Lindeman Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindeman Asia Investment has no effect on the direction of Coloray International i.e., Coloray International and Lindeman Asia go up and down completely randomly.
Pair Corralation between Coloray International and Lindeman Asia
Assuming the 90 days trading horizon Coloray International Investment is expected to generate 0.71 times more return on investment than Lindeman Asia. However, Coloray International Investment is 1.4 times less risky than Lindeman Asia. It trades about -0.2 of its potential returns per unit of risk. Lindeman Asia Investment is currently generating about -0.15 per unit of risk. If you would invest 66,800 in Coloray International Investment on August 27, 2024 and sell it today you would lose (6,800) from holding Coloray International Investment or give up 10.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. Lindeman Asia Investment
Performance |
| Timeline |
| Coloray International |
| Lindeman Asia Investment |
Coloray International and Lindeman Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and Lindeman Asia
The main advantage of trading using opposite Coloray International and Lindeman Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, Lindeman Asia 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 Lindeman Asia will offset losses from the drop in Lindeman Asia's long position.| Coloray International vs. Shinsung Delta Tech | Coloray International vs. PH Tech Co | Coloray International vs. FOODWELL Co | Coloray International vs. Orbitech 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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