Correlation Between Aurora Design and SCG Packaging
Can any of the company-specific risk be diversified away by investing in both Aurora Design and SCG Packaging 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 Aurora Design and SCG Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Design PCL and SCG Packaging Public, you can compare the effects of market volatilities on Aurora Design and SCG Packaging 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 Aurora Design with a short position of SCG Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Design and SCG Packaging.
Diversification Opportunities for Aurora Design and SCG Packaging
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aurora and SCG is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Design PCL and SCG Packaging Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCG Packaging Public and Aurora Design 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 Aurora Design PCL are associated (or correlated) with SCG Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCG Packaging Public has no effect on the direction of Aurora Design i.e., Aurora Design and SCG Packaging go up and down completely randomly.
Pair Corralation between Aurora Design and SCG Packaging
Assuming the 90 days trading horizon Aurora Design PCL is expected to generate 1.0 times more return on investment than SCG Packaging. However, Aurora Design PCL is 1.0 times less risky than SCG Packaging. It trades about 0.04 of its potential returns per unit of risk. SCG Packaging Public is currently generating about 0.04 per unit of risk. If you would invest 1,545 in Aurora Design PCL on September 3, 2024 and sell it today you would lose (85.00) from holding Aurora Design PCL or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Design PCL vs. SCG Packaging Public
Performance |
| Timeline |
| Aurora Design PCL |
| SCG Packaging Public |
Aurora Design and SCG Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Design and SCG Packaging
The main advantage of trading using opposite Aurora Design and SCG Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Design position performs unexpectedly, SCG Packaging 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 SCG Packaging will offset losses from the drop in SCG Packaging's long position.| Aurora Design vs. Srinanaporn Marketing Public | Aurora Design vs. AP Public | Aurora Design vs. Mega Lifesciences Public | Aurora Design vs. Siam Global House |
| SCG Packaging vs. AJ Plast Public | SCG Packaging vs. Thai Metal Drum | SCG Packaging vs. Thantawan Industry Public | SCG Packaging vs. Thai Film Industries |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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