Correlation Between Business Online and Eastern Technical
Can any of the company-specific risk be diversified away by investing in both Business Online and Eastern Technical 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 Business Online and Eastern Technical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Business Online PCL and Eastern Technical Engineering, you can compare the effects of market volatilities on Business Online and Eastern Technical 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 Business Online with a short position of Eastern Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Business Online and Eastern Technical.
Diversification Opportunities for Business Online and Eastern Technical
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Business and Eastern is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Business Online PCL and Eastern Technical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Technical and Business Online 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 Business Online PCL are associated (or correlated) with Eastern Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Technical has no effect on the direction of Business Online i.e., Business Online and Eastern Technical go up and down completely randomly.
Pair Corralation between Business Online and Eastern Technical
Assuming the 90 days trading horizon Business Online PCL is expected to generate 0.76 times more return on investment than Eastern Technical. However, Business Online PCL is 1.31 times less risky than Eastern Technical. It trades about -0.09 of its potential returns per unit of risk. Eastern Technical Engineering is currently generating about -0.18 per unit of risk. If you would invest 635.00 in Business Online PCL on August 25, 2024 and sell it today you would lose (35.00) from holding Business Online PCL or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Business Online PCL vs. Eastern Technical Engineering
Performance |
| Timeline |
| Business Online PCL |
| Eastern Technical |
Business Online and Eastern Technical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Business Online and Eastern Technical
The main advantage of trading using opposite Business Online and Eastern Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Business Online position performs unexpectedly, Eastern Technical 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 Eastern Technical will offset losses from the drop in Eastern Technical's long position.| Business Online vs. QTC Energy Public | Business Online vs. Premier Technology Public | Business Online vs. Sea Oil Public | Business Online vs. The Erawan Group |
| Eastern Technical vs. Gunkul Engineering Public | Eastern Technical vs. The Erawan Group | Eastern Technical vs. Autocorp Holding Public | Eastern Technical vs. XSpring Capital Public |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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