Correlation Between Advanced Information and TRV Rubber
Can any of the company-specific risk be diversified away by investing in both Advanced Information and TRV Rubber 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 Advanced Information and TRV Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Information Technology and TRV Rubber Products, you can compare the effects of market volatilities on Advanced Information and TRV Rubber 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 Advanced Information with a short position of TRV Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Information and TRV Rubber.
Diversification Opportunities for Advanced Information and TRV Rubber
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advanced and TRV is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and TRV Rubber Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRV Rubber Products and Advanced Information 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 Advanced Information Technology are associated (or correlated) with TRV Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRV Rubber Products has no effect on the direction of Advanced Information i.e., Advanced Information and TRV Rubber go up and down completely randomly.
Pair Corralation between Advanced Information and TRV Rubber
Assuming the 90 days trading horizon Advanced Information Technology is expected to generate 17.58 times more return on investment than TRV Rubber. However, Advanced Information is 17.58 times more volatile than TRV Rubber Products. It trades about 0.08 of its potential returns per unit of risk. TRV Rubber Products is currently generating about 0.03 per unit of risk. If you would invest 384.00 in Advanced Information Technology on September 12, 2024 and sell it today you would earn a total of 44.00 from holding Advanced Information Technology or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.26% |
| Values | Daily Returns |
Advanced Information Technolog vs. TRV Rubber Products
Performance |
| Timeline |
| Advanced Information |
| TRV Rubber Products |
Advanced Information and TRV Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Information and TRV Rubber
The main advantage of trading using opposite Advanced Information and TRV Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Information position performs unexpectedly, TRV Rubber 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 TRV Rubber will offset losses from the drop in TRV Rubber's long position.| Advanced Information vs. AP Public | Advanced Information vs. Jasmine International Public | Advanced Information vs. Asia Plus Group | Advanced Information vs. Bangchak Public |
| TRV Rubber vs. Thai Stanley Electric | TRV Rubber vs. Somboon Advance Technology | TRV Rubber vs. Thai Steel Cable | TRV Rubber vs. President Automobile Industries |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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