Correlation Between AJ Plast and Pacific Pipe
Can any of the company-specific risk be diversified away by investing in both AJ Plast and Pacific Pipe 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 Pacific Pipe 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 Pacific Pipe Public, you can compare the effects of market volatilities on AJ Plast and Pacific Pipe 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 Pacific Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Plast and Pacific Pipe.
Diversification Opportunities for AJ Plast and Pacific Pipe
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between AJ Plast and Pacific is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AJ Plast Public and Pacific Pipe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Pipe Public 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 Pacific Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Pipe Public has no effect on the direction of AJ Plast i.e., AJ Plast and Pacific Pipe go up and down completely randomly.
Pair Corralation between AJ Plast and Pacific Pipe
Assuming the 90 days horizon AJ Plast Public is expected to generate 0.45 times more return on investment than Pacific Pipe. However, AJ Plast Public is 2.2 times less risky than Pacific Pipe. It trades about -0.16 of its potential returns per unit of risk. Pacific Pipe Public is currently generating about -0.42 per unit of risk. If you would invest 510.00 in AJ Plast Public on August 29, 2024 and sell it today you would lose (22.00) from holding AJ Plast Public or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AJ Plast Public vs. Pacific Pipe Public
Performance |
| Timeline |
| AJ Plast Public |
| Pacific Pipe Public |
AJ Plast and Pacific Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AJ Plast and Pacific Pipe
The main advantage of trading using opposite AJ Plast and Pacific Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Plast position performs unexpectedly, Pacific Pipe 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 Pacific Pipe will offset losses from the drop in Pacific Pipe'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 |
| Pacific Pipe vs. 2S Metal Public | Pacific Pipe vs. AAPICO Hitech Public | Pacific Pipe vs. AJ Plast 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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