Correlation Between Alphanam and South Basic
Can any of the company-specific risk be diversified away by investing in both Alphanam and South Basic 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 South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphanam ME and South Basic Chemicals, you can compare the effects of market volatilities on Alphanam and South Basic 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 South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and South Basic.
Diversification Opportunities for Alphanam and South Basic
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alphanam and South is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals 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 South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of Alphanam i.e., Alphanam and South Basic go up and down completely randomly.
Pair Corralation between Alphanam and South Basic
Assuming the 90 days trading horizon Alphanam ME is expected to generate 0.53 times more return on investment than South Basic. However, Alphanam ME is 1.89 times less risky than South Basic. It trades about -0.07 of its potential returns per unit of risk. South Basic Chemicals is currently generating about -0.05 per unit of risk. If you would invest 1,070,000 in Alphanam ME on August 25, 2024 and sell it today you would lose (570,000) from holding Alphanam ME or give up 53.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.97% |
| Values | Daily Returns |
Alphanam ME vs. South Basic Chemicals
Performance |
| Timeline |
| Alphanam ME |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| South Basic Chemicals |
Alphanam and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphanam and South Basic
The main advantage of trading using opposite Alphanam and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphanam position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.| Alphanam vs. Transport and Industry | Alphanam vs. Petrolimex Information Technology | Alphanam vs. PVI Reinsurance Corp | Alphanam vs. Japan Vietnam Medical |
| South Basic vs. Sao Vang Rubber | South Basic vs. Pha Lai Thermal | South Basic vs. Century Synthetic Fiber | South Basic vs. BaoMinh Insurance Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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