Correlation Between Crown Asia and Century Pacific
Can any of the company-specific risk be diversified away by investing in both Crown Asia and Century Pacific 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 Crown Asia and Century Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Asia Chemicals and Century Pacific Food, you can compare the effects of market volatilities on Crown Asia and Century Pacific 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 Crown Asia with a short position of Century Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Century Pacific.
Diversification Opportunities for Crown Asia and Century Pacific
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crown and Century is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Century Pacific Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Pacific Food and Crown Asia 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 Crown Asia Chemicals are associated (or correlated) with Century Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Pacific Food has no effect on the direction of Crown Asia i.e., Crown Asia and Century Pacific go up and down completely randomly.
Pair Corralation between Crown Asia and Century Pacific
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to generate 1.4 times more return on investment than Century Pacific. However, Crown Asia is 1.4 times more volatile than Century Pacific Food. It trades about -0.02 of its potential returns per unit of risk. Century Pacific Food is currently generating about -0.07 per unit of risk. If you would invest 174.00 in Crown Asia Chemicals on November 2, 2024 and sell it today you would lose (3.00) from holding Crown Asia Chemicals or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Asia Chemicals vs. Century Pacific Food
Performance |
| Timeline |
| Crown Asia Chemicals |
| Century Pacific Food |
Crown Asia and Century Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and Century Pacific
The main advantage of trading using opposite Crown Asia and Century Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, Century Pacific 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 Century Pacific will offset losses from the drop in Century Pacific's long position.| Crown Asia vs. SM Investments Corp | Crown Asia vs. Atlas Consolidated Mining | Crown Asia vs. STI Education Systems | Crown Asia vs. Lepanto Consolidated Mining |
| Century Pacific vs. Lepanto Consolidated Mining | Century Pacific vs. Crown Asia Chemicals | Century Pacific vs. Metro Retail Stores | Century Pacific vs. Jollibee Foods Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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