Correlation Between Applied Materials and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Applied Materials and THRACE PLASTICS 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 Applied Materials and THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and THRACE PLASTICS, you can compare the effects of market volatilities on Applied Materials and THRACE PLASTICS 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 Applied Materials with a short position of THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and THRACE PLASTICS.
Diversification Opportunities for Applied Materials and THRACE PLASTICS
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and THRACE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and Applied Materials 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 Applied Materials are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Applied Materials i.e., Applied Materials and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Applied Materials and THRACE PLASTICS
Assuming the 90 days horizon Applied Materials is expected to under-perform the THRACE PLASTICS. In addition to that, Applied Materials is 2.02 times more volatile than THRACE PLASTICS. It trades about -0.07 of its total potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.26 per unit of volatility. If you would invest 364.00 in THRACE PLASTICS on August 31, 2024 and sell it today you would earn a total of 32.00 from holding THRACE PLASTICS or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. THRACE PLASTICS
Performance |
| Timeline |
| Applied Materials |
| THRACE PLASTICS |
Applied Materials and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and THRACE PLASTICS
The main advantage of trading using opposite Applied Materials and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| Applied Materials vs. ASML Holding NV | Applied Materials vs. Superior Plus Corp | Applied Materials vs. NMI Holdings | Applied Materials vs. Origin Agritech |
| THRACE PLASTICS vs. SBA Communications Corp | THRACE PLASTICS vs. Madison Square Garden | THRACE PLASTICS vs. MTI WIRELESS EDGE | THRACE PLASTICS vs. TRAVEL LEISURE DL 01 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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