Correlation Between Alphanam and CMC Investment
Can any of the company-specific risk be diversified away by investing in both Alphanam and CMC Investment 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 Alphanam and CMC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphanam ME and CMC Investment JSC, you can compare the effects of market volatilities on Alphanam and CMC Investment 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 Alphanam with a short position of CMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and CMC Investment.
Diversification Opportunities for Alphanam and CMC Investment
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphanam and CMC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and CMC Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Investment JSC and Alphanam 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 Alphanam ME are associated (or correlated) with CMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Investment JSC has no effect on the direction of Alphanam i.e., Alphanam and CMC Investment go up and down completely randomly.
Pair Corralation between Alphanam and CMC Investment
Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the CMC Investment. But the stock apears to be less risky and, when comparing its historical volatility, Alphanam ME is 1.95 times less risky than CMC Investment. The stock trades about -0.08 of its potential returns per unit of risk. The CMC Investment JSC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 500,000 in CMC Investment JSC on August 29, 2024 and sell it today you would earn a total of 100,000 from holding CMC Investment JSC or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.54% |
| Values | Daily Returns |
Alphanam ME vs. CMC Investment JSC
Performance |
| Timeline |
| Alphanam ME |
| CMC Investment JSC |
Alphanam and CMC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphanam and CMC Investment
The main advantage of trading using opposite Alphanam and CMC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphanam position performs unexpectedly, CMC Investment 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 CMC Investment will offset losses from the drop in CMC Investment's long position.| Alphanam vs. PetroVietnam Transportation Corp | Alphanam vs. Innovative Technology Development | Alphanam vs. Hai An Transport | Alphanam vs. Transimex Transportation JSC |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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