Correlation Between Com7 PCL and DOD Biotech
Can any of the company-specific risk be diversified away by investing in both Com7 PCL and DOD Biotech 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 Com7 PCL and DOD Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Com7 PCL and DOD Biotech Public, you can compare the effects of market volatilities on Com7 PCL and DOD Biotech 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 Com7 PCL with a short position of DOD Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com7 PCL and DOD Biotech.
Diversification Opportunities for Com7 PCL and DOD Biotech
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Com7 and DOD is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Com7 PCL and DOD Biotech Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOD Biotech Public and Com7 PCL 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 Com7 PCL are associated (or correlated) with DOD Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOD Biotech Public has no effect on the direction of Com7 PCL i.e., Com7 PCL and DOD Biotech go up and down completely randomly.
Pair Corralation between Com7 PCL and DOD Biotech
Assuming the 90 days trading horizon Com7 PCL is expected to generate 0.93 times more return on investment than DOD Biotech. However, Com7 PCL is 1.07 times less risky than DOD Biotech. It trades about -0.07 of its potential returns per unit of risk. DOD Biotech Public is currently generating about -0.27 per unit of risk. If you would invest 2,775 in Com7 PCL on September 2, 2024 and sell it today you would lose (125.00) from holding Com7 PCL or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Com7 PCL vs. DOD Biotech Public
Performance |
| Timeline |
| Com7 PCL |
| DOD Biotech Public |
Com7 PCL and DOD Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Com7 PCL and DOD Biotech
The main advantage of trading using opposite Com7 PCL and DOD Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com7 PCL position performs unexpectedly, DOD Biotech 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 DOD Biotech will offset losses from the drop in DOD Biotech's long position.| Com7 PCL vs. CP ALL Public | Com7 PCL vs. Home Product Center | Com7 PCL vs. Minor International Public | Com7 PCL vs. Bangkok Dusit Medical |
| DOD Biotech vs. Mega Lifesciences Public | DOD Biotech vs. Com7 PCL | DOD Biotech vs. Thai Union Group | DOD Biotech vs. Jay Mart 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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