Correlation Between BANPU POWER and New Plus
Can any of the company-specific risk be diversified away by investing in both BANPU POWER and New Plus 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 BANPU POWER and New Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANPU POWER and New Plus Knitting, you can compare the effects of market volatilities on BANPU POWER and New Plus 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 BANPU POWER with a short position of New Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANPU POWER and New Plus.
Diversification Opportunities for BANPU POWER and New Plus
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BANPU and New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BANPU POWER and New Plus Knitting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Plus Knitting and BANPU POWER 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 BANPU POWER are associated (or correlated) with New Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Plus Knitting has no effect on the direction of BANPU POWER i.e., BANPU POWER and New Plus go up and down completely randomly.
Pair Corralation between BANPU POWER and New Plus
Assuming the 90 days trading horizon BANPU POWER is expected to under-perform the New Plus. In addition to that, BANPU POWER is 1.22 times more volatile than New Plus Knitting. It trades about -0.23 of its total potential returns per unit of risk. New Plus Knitting is currently generating about -0.03 per unit of volatility. If you would invest 1,150 in New Plus Knitting on October 22, 2024 and sell it today you would lose (60.00) from holding New Plus Knitting or give up 5.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANPU POWER vs. New Plus Knitting
Performance |
| Timeline |
| BANPU POWER |
| New Plus Knitting |
BANPU POWER and New Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANPU POWER and New Plus
The main advantage of trading using opposite BANPU POWER and New Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANPU POWER position performs unexpectedly, New Plus 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 New Plus will offset losses from the drop in New Plus' long position.| BANPU POWER vs. Charoen Pokphand Foods | BANPU POWER vs. The Siam Cement | BANPU POWER vs. Ratch Group Public | BANPU POWER vs. Amata Public |
| New Plus vs. Pan Asia Footwear | New Plus vs. NEP Realty and | New Plus vs. Ocean Glass Public | New Plus vs. Metro Systems |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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