Correlation Between Alucon Public and Asia Fiber
Can any of the company-specific risk be diversified away by investing in both Alucon Public and Asia Fiber 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 Alucon Public and Asia Fiber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alucon Public and Asia Fiber Public, you can compare the effects of market volatilities on Alucon Public and Asia Fiber 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 Alucon Public with a short position of Asia Fiber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alucon Public and Asia Fiber.
Diversification Opportunities for Alucon Public and Asia Fiber
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alucon and Asia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alucon Public and Asia Fiber Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Fiber Public and Alucon Public 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 Alucon Public are associated (or correlated) with Asia Fiber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Fiber Public has no effect on the direction of Alucon Public i.e., Alucon Public and Asia Fiber go up and down completely randomly.
Pair Corralation between Alucon Public and Asia Fiber
Assuming the 90 days trading horizon Alucon Public is expected to generate 1.0 times more return on investment than Asia Fiber. However, Alucon Public is 1.0 times less risky than Asia Fiber. It trades about 0.08 of its potential returns per unit of risk. Asia Fiber Public is currently generating about 0.08 per unit of risk. If you would invest 17,400 in Alucon Public on September 3, 2024 and sell it today you would lose (400.00) from holding Alucon Public or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alucon Public vs. Asia Fiber Public
Performance |
| Timeline |
| Alucon Public |
| Asia Fiber Public |
Alucon Public and Asia Fiber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alucon Public and Asia Fiber
The main advantage of trading using opposite Alucon Public and Asia Fiber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alucon Public position performs unexpectedly, Asia Fiber 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 Asia Fiber will offset losses from the drop in Asia Fiber's long position.| Alucon Public vs. PTT Public | Alucon Public vs. PTT Exploration and | Alucon Public vs. The Siam Cement | Alucon Public vs. CP ALL Public |
| Asia Fiber vs. Central Pattana Public | Asia Fiber vs. CP ALL Public | Asia Fiber vs. Bangkok Dusit Medical | Asia Fiber vs. Airports of Thailand |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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