Correlation Between AP Public and NAT ABSOLUTE
Can any of the company-specific risk be diversified away by investing in both AP Public and NAT ABSOLUTE 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 AP Public and NAT ABSOLUTE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Public and NAT ABSOLUTE TECHNOLOGIES, you can compare the effects of market volatilities on AP Public and NAT ABSOLUTE 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 AP Public with a short position of NAT ABSOLUTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Public and NAT ABSOLUTE.
Diversification Opportunities for AP Public and NAT ABSOLUTE
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AP Public and NAT is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding AP Public and NAT ABSOLUTE TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAT ABSOLUTE TECHNOLOGIES and AP 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 AP Public are associated (or correlated) with NAT ABSOLUTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAT ABSOLUTE TECHNOLOGIES has no effect on the direction of AP Public i.e., AP Public and NAT ABSOLUTE go up and down completely randomly.
Pair Corralation between AP Public and NAT ABSOLUTE
Assuming the 90 days horizon AP Public is expected to generate 0.63 times more return on investment than NAT ABSOLUTE. However, AP Public is 1.59 times less risky than NAT ABSOLUTE. It trades about -0.01 of its potential returns per unit of risk. NAT ABSOLUTE TECHNOLOGIES is currently generating about -0.04 per unit of risk. If you would invest 905.00 in AP Public on September 3, 2024 and sell it today you would lose (35.00) from holding AP Public or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Public vs. NAT ABSOLUTE TECHNOLOGIES
Performance |
| Timeline |
| AP Public |
| NAT ABSOLUTE TECHNOLOGIES |
AP Public and NAT ABSOLUTE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Public and NAT ABSOLUTE
The main advantage of trading using opposite AP Public and NAT ABSOLUTE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Public position performs unexpectedly, NAT ABSOLUTE 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 NAT ABSOLUTE will offset losses from the drop in NAT ABSOLUTE's long position.| AP Public vs. Land and Houses | AP Public vs. Quality Houses Public | AP Public vs. Bangkok Bank Public | AP Public vs. Siri Prime Office |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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