Correlation Between Union Auction and Smart Concrete
Can any of the company-specific risk be diversified away by investing in both Union Auction and Smart Concrete 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 Union Auction and Smart Concrete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Auction Public and Smart Concrete Public, you can compare the effects of market volatilities on Union Auction and Smart Concrete 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 Union Auction with a short position of Smart Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Auction and Smart Concrete.
Diversification Opportunities for Union Auction and Smart Concrete
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Union and Smart is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Union Auction Public and Smart Concrete Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Concrete Public and Union Auction 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 Union Auction Public are associated (or correlated) with Smart Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Concrete Public has no effect on the direction of Union Auction i.e., Union Auction and Smart Concrete go up and down completely randomly.
Pair Corralation between Union Auction and Smart Concrete
Assuming the 90 days trading horizon Union Auction Public is expected to under-perform the Smart Concrete. But the stock apears to be less risky and, when comparing its historical volatility, Union Auction Public is 25.79 times less risky than Smart Concrete. The stock trades about -0.01 of its potential returns per unit of risk. The Smart Concrete Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 83.00 in Smart Concrete Public on September 4, 2024 and sell it today you would lose (6.00) from holding Smart Concrete Public or give up 7.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Auction Public vs. Smart Concrete Public
Performance |
| Timeline |
| Union Auction Public |
| Smart Concrete Public |
Union Auction and Smart Concrete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Auction and Smart Concrete
The main advantage of trading using opposite Union Auction and Smart Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Auction position performs unexpectedly, Smart Concrete 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 Smart Concrete will offset losses from the drop in Smart Concrete's long position.| Union Auction vs. AP Public | Union Auction vs. Carabao Group Public | Union Auction vs. Forth Smart Service | Union Auction vs. Com7 PCL |
| Smart Concrete vs. Salee Industry Public | Smart Concrete vs. Sea Oil Public | Smart Concrete vs. Rayong Wire Industries | Smart Concrete vs. Project Planning Service |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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