Correlation Between AJ Plast and NEP Realty
Can any of the company-specific risk be diversified away by investing in both AJ Plast and NEP Realty 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 NEP Realty 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 NEP Realty and, you can compare the effects of market volatilities on AJ Plast and NEP Realty 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 NEP Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Plast and NEP Realty.
Diversification Opportunities for AJ Plast and NEP Realty
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AJ Plast and NEP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AJ Plast Public and NEP Realty and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEP Realty 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 NEP Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEP Realty has no effect on the direction of AJ Plast i.e., AJ Plast and NEP Realty go up and down completely randomly.
Pair Corralation between AJ Plast and NEP Realty
Assuming the 90 days horizon AJ Plast Public is expected to under-perform the NEP Realty. But the stock apears to be less risky and, when comparing its historical volatility, AJ Plast Public is 1.6 times less risky than NEP Realty. The stock trades about -0.38 of its potential returns per unit of risk. The NEP Realty and is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21.00 in NEP Realty and on November 27, 2024 and sell it today you would earn a total of 3.00 from holding NEP Realty and or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AJ Plast Public vs. NEP Realty and
Performance |
| Timeline |
| AJ Plast Public |
| NEP Realty |
AJ Plast and NEP Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AJ Plast and NEP Realty
The main advantage of trading using opposite AJ Plast and NEP Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Plast position performs unexpectedly, NEP Realty 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 NEP Realty will offset losses from the drop in NEP Realty'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 |
| NEP Realty vs. Nawarat Patanakarn Public | NEP Realty vs. Newcity Public | NEP Realty vs. Pan Asia Footwear | NEP Realty vs. Ocean Glass 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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