Correlation Between Big Camera and General Engineering
Can any of the company-specific risk be diversified away by investing in both Big Camera and General Engineering 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 Big Camera and General Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Camera and General Engineering Public, you can compare the effects of market volatilities on Big Camera and General Engineering 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 Big Camera with a short position of General Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Camera and General Engineering.
Diversification Opportunities for Big Camera and General Engineering
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Big and General is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Big Camera and General Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Engineering and Big Camera 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 Big Camera are associated (or correlated) with General Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Engineering has no effect on the direction of Big Camera i.e., Big Camera and General Engineering go up and down completely randomly.
Pair Corralation between Big Camera and General Engineering
Assuming the 90 days trading horizon Big Camera is expected to generate 0.99 times more return on investment than General Engineering. However, Big Camera is 1.01 times less risky than General Engineering. It trades about 0.06 of its potential returns per unit of risk. General Engineering Public is currently generating about 0.06 per unit of risk. If you would invest 49.00 in Big Camera on September 4, 2024 and sell it today you would lose (13.00) from holding Big Camera or give up 26.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.58% |
| Values | Daily Returns |
Big Camera vs. General Engineering Public
Performance |
| Timeline |
| Big Camera |
| General Engineering |
Big Camera and General Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Camera and General Engineering
The main advantage of trading using opposite Big Camera and General Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Camera position performs unexpectedly, General Engineering 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 General Engineering will offset losses from the drop in General Engineering's long position.| Big Camera vs. Ananda Development Public | Big Camera vs. Asia Aviation Public | Big Camera vs. Gunkul Engineering Public | Big Camera vs. CK Power Public |
| General Engineering vs. Dcon Products Public | General Engineering vs. Chonburi Concrete Product | General Engineering vs. Eastern Polymer Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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