Correlation Between CPR Gomu and Firetrade Engineering
Can any of the company-specific risk be diversified away by investing in both CPR Gomu and Firetrade Engineering 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 CPR Gomu and Firetrade Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPR Gomu Industrial and Firetrade Engineering Public, you can compare the effects of market volatilities on CPR Gomu and Firetrade Engineering 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 CPR Gomu with a short position of Firetrade Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPR Gomu and Firetrade Engineering.
Diversification Opportunities for CPR Gomu and Firetrade Engineering
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CPR and Firetrade is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CPR Gomu Industrial and Firetrade Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firetrade Engineering and CPR Gomu 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 CPR Gomu Industrial are associated (or correlated) with Firetrade Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firetrade Engineering has no effect on the direction of CPR Gomu i.e., CPR Gomu and Firetrade Engineering go up and down completely randomly.
Pair Corralation between CPR Gomu and Firetrade Engineering
Assuming the 90 days trading horizon CPR Gomu Industrial is expected to generate 3.42 times more return on investment than Firetrade Engineering. However, CPR Gomu is 3.42 times more volatile than Firetrade Engineering Public. It trades about 0.22 of its potential returns per unit of risk. Firetrade Engineering Public is currently generating about 0.19 per unit of risk. If you would invest 289.00 in CPR Gomu Industrial on September 13, 2024 and sell it today you would earn a total of 55.00 from holding CPR Gomu Industrial or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPR Gomu Industrial vs. Firetrade Engineering Public
Performance |
| Timeline |
| CPR Gomu Industrial |
| Firetrade Engineering |
CPR Gomu and Firetrade Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPR Gomu and Firetrade Engineering
The main advantage of trading using opposite CPR Gomu and Firetrade Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPR Gomu position performs unexpectedly, Firetrade Engineering 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 Firetrade Engineering will offset losses from the drop in Firetrade Engineering's long position.| CPR Gomu vs. Salee Colour Public | CPR Gomu vs. Business Online PCL | CPR Gomu vs. Communication System Solution | CPR Gomu vs. CI Group Public |
| Firetrade Engineering vs. Tata Steel Public | Firetrade Engineering vs. TTCL Public | Firetrade Engineering vs. Thaifoods Group Public | Firetrade Engineering vs. TMT Steel 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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