Correlation Between CK Power and Better World
Can any of the company-specific risk be diversified away by investing in both CK Power and Better World 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 CK Power and Better World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CK Power Public and Better World Green, you can compare the effects of market volatilities on CK Power and Better World 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 CK Power with a short position of Better World. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Power and Better World.
Diversification Opportunities for CK Power and Better World
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CKP and Better is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public and Better World Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better World Green and CK 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 CK Power Public are associated (or correlated) with Better World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better World Green has no effect on the direction of CK Power i.e., CK Power and Better World go up and down completely randomly.
Pair Corralation between CK Power and Better World
Assuming the 90 days trading horizon CK Power Public is expected to generate 0.53 times more return on investment than Better World. However, CK Power Public is 1.88 times less risky than Better World. It trades about -0.03 of its potential returns per unit of risk. Better World Green is currently generating about -0.02 per unit of risk. If you would invest 452.00 in CK Power Public on August 30, 2024 and sell it today you would lose (126.00) from holding CK Power Public or give up 27.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CK Power Public vs. Better World Green
Performance |
| Timeline |
| CK Power Public |
| Better World Green |
CK Power and Better World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CK Power and Better World
The main advantage of trading using opposite CK Power and Better World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Power position performs unexpectedly, Better World 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 Better World will offset losses from the drop in Better World's long position.| CK Power vs. Energy Absolute Public | CK Power vs. BCPG Public | CK Power vs. Bangkok Expressway and | CK Power vs. Gulf Energy Development |
| Better World vs. Beauty Community Public | Better World vs. Demco Public | Better World vs. Asia Aviation Public | Better World vs. CK Power 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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