Correlation Between Central Plaza and AP Public
Can any of the company-specific risk be diversified away by investing in both Central Plaza and AP Public 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 Central Plaza and AP Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Plaza Hotel and AP Public, you can compare the effects of market volatilities on Central Plaza and AP Public 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 Central Plaza with a short position of AP Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Plaza and AP Public.
Diversification Opportunities for Central Plaza and AP Public
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and AP Public is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Central Plaza Hotel and AP Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Public and Central Plaza 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 Central Plaza Hotel are associated (or correlated) with AP Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Public has no effect on the direction of Central Plaza i.e., Central Plaza and AP Public go up and down completely randomly.
Pair Corralation between Central Plaza and AP Public
Assuming the 90 days trading horizon Central Plaza Hotel is expected to generate 1.45 times more return on investment than AP Public. However, Central Plaza is 1.45 times more volatile than AP Public. It trades about 0.15 of its potential returns per unit of risk. AP Public is currently generating about -0.25 per unit of risk. If you would invest 3,500 in Central Plaza Hotel on August 31, 2024 and sell it today you would earn a total of 275.00 from holding Central Plaza Hotel or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Plaza Hotel vs. AP Public
Performance |
| Timeline |
| Central Plaza Hotel |
| AP Public |
Central Plaza and AP Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Plaza and AP Public
The main advantage of trading using opposite Central Plaza and AP Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Plaza position performs unexpectedly, AP Public 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 AP Public will offset losses from the drop in AP Public's long position.| Central Plaza vs. TRC Construction Public | Central Plaza vs. Bangkok Expressway and | Central Plaza vs. Lohakit Metal Public | Central Plaza vs. Gunkul Engineering Public |
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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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