Correlation Between ALL ENERGY and Union Plastic
Can any of the company-specific risk be diversified away by investing in both ALL ENERGY and Union 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 ALL ENERGY and Union Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALL ENERGY UTILITIES and Union Plastic Public, you can compare the effects of market volatilities on ALL ENERGY and Union 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 ALL ENERGY with a short position of Union Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALL ENERGY and Union Plastic.
Diversification Opportunities for ALL ENERGY and Union Plastic
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ALL and Union is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ALL ENERGY UTILITIES and Union Plastic Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Plastic Public and ALL ENERGY 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 ALL ENERGY UTILITIES are associated (or correlated) with Union Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Plastic Public has no effect on the direction of ALL ENERGY i.e., ALL ENERGY and Union Plastic go up and down completely randomly.
Pair Corralation between ALL ENERGY and Union Plastic
Assuming the 90 days horizon ALL ENERGY UTILITIES is expected to under-perform the Union Plastic. In addition to that, ALL ENERGY is 1.29 times more volatile than Union Plastic Public. It trades about -0.08 of its total potential returns per unit of risk. Union Plastic Public is currently generating about -0.02 per unit of volatility. If you would invest 1,700 in Union Plastic Public on October 20, 2024 and sell it today you would lose (20.00) from holding Union Plastic Public or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALL ENERGY UTILITIES vs. Union Plastic Public
Performance |
| Timeline |
| ALL ENERGY UTILITIES |
| Union Plastic Public |
ALL ENERGY and Union Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALL ENERGY and Union Plastic
The main advantage of trading using opposite ALL ENERGY and Union Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALL ENERGY position performs unexpectedly, Union 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 Union Plastic will offset losses from the drop in Union Plastic's long position.| ALL ENERGY vs. NC Housing Public | ALL ENERGY vs. Origin Property PCL | ALL ENERGY vs. Property Perfect Public | ALL ENERGY vs. Britania PCL |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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