Correlation Between Birla Carbon and Salee Colour
Can any of the company-specific risk be diversified away by investing in both Birla Carbon and Salee Colour 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 Birla Carbon and Salee Colour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birla Carbon Public and Salee Colour Public, you can compare the effects of market volatilities on Birla Carbon and Salee Colour 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 Birla Carbon with a short position of Salee Colour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birla Carbon and Salee Colour.
Diversification Opportunities for Birla Carbon and Salee Colour
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Birla and Salee is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Birla Carbon Public and Salee Colour Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salee Colour Public and Birla Carbon 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 Birla Carbon Public are associated (or correlated) with Salee Colour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salee Colour Public has no effect on the direction of Birla Carbon i.e., Birla Carbon and Salee Colour go up and down completely randomly.
Pair Corralation between Birla Carbon and Salee Colour
Assuming the 90 days trading horizon Birla Carbon Public is expected to generate 1.0 times more return on investment than Salee Colour. However, Birla Carbon is 1.0 times more volatile than Salee Colour Public. It trades about 0.06 of its potential returns per unit of risk. Salee Colour Public is currently generating about 0.06 per unit of risk. If you would invest 5,581 in Birla Carbon Public on August 25, 2024 and sell it today you would earn a total of 1,294 from holding Birla Carbon Public or generate 23.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.55% |
| Values | Daily Returns |
Birla Carbon Public vs. Salee Colour Public
Performance |
| Timeline |
| Birla Carbon Public |
| Salee Colour Public |
Birla Carbon and Salee Colour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birla Carbon and Salee Colour
The main advantage of trading using opposite Birla Carbon and Salee Colour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birla Carbon position performs unexpectedly, Salee Colour 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 Salee Colour will offset losses from the drop in Salee Colour's long position.| Birla Carbon vs. Indorama Ventures PCL | Birla Carbon vs. Gratitude Infinite Public | Birla Carbon vs. Bangkok Life Assurance | Birla Carbon vs. AAPICO Hitech Public |
| Salee Colour vs. Megachem Public | Salee Colour vs. NCL International Logistics | Salee Colour vs. The Erawan Group | Salee Colour vs. Airports of Thailand |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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