Correlation Between AJ Plast and MK Restaurant
Can any of the company-specific risk be diversified away by investing in both AJ Plast and MK Restaurant 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 AJ Plast and MK Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AJ Plast Public and MK Restaurant Group, you can compare the effects of market volatilities on AJ Plast and MK Restaurant 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 AJ Plast with a short position of MK Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Plast and MK Restaurant.
Diversification Opportunities for AJ Plast and MK Restaurant
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AJ Plast and MK Restaurant is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding AJ Plast Public and MK Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MK Restaurant Group and AJ Plast 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 AJ Plast Public are associated (or correlated) with MK Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MK Restaurant Group has no effect on the direction of AJ Plast i.e., AJ Plast and MK Restaurant go up and down completely randomly.
Pair Corralation between AJ Plast and MK Restaurant
Assuming the 90 days horizon AJ Plast Public is expected to generate 30.05 times more return on investment than MK Restaurant. However, AJ Plast is 30.05 times more volatile than MK Restaurant Group. It trades about 0.04 of its potential returns per unit of risk. MK Restaurant Group is currently generating about -0.1 per unit of risk. If you would invest 1,227 in AJ Plast Public on September 2, 2024 and sell it today you would lose (747.00) from holding AJ Plast Public or give up 60.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AJ Plast Public vs. MK Restaurant Group
Performance |
| Timeline |
| AJ Plast Public |
| MK Restaurant Group |
AJ Plast and MK Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AJ Plast and MK Restaurant
The main advantage of trading using opposite AJ Plast and MK Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Plast position performs unexpectedly, MK Restaurant 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 MK Restaurant will offset losses from the drop in MK Restaurant's long position.| AJ Plast vs. AAPICO Hitech Public | AJ Plast vs. AP Public | AJ Plast vs. Aikchol Hospital Public | AJ Plast vs. Bank of Ayudhya |
| MK Restaurant vs. Minor International Public | MK Restaurant vs. Home Product Center | MK Restaurant vs. CP ALL Public | MK Restaurant vs. Central Pattana Public |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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