Correlation Between Crown Asia and Liberty Flour
Can any of the company-specific risk be diversified away by investing in both Crown Asia and Liberty Flour 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 Liberty Flour 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 Liberty Flour Mills, you can compare the effects of market volatilities on Crown Asia and Liberty Flour 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 Liberty Flour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Liberty Flour.
Diversification Opportunities for Crown Asia and Liberty Flour
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crown and Liberty is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Liberty Flour Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Flour Mills 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 Liberty Flour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Flour Mills has no effect on the direction of Crown Asia i.e., Crown Asia and Liberty Flour go up and down completely randomly.
Pair Corralation between Crown Asia and Liberty Flour
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to generate 0.44 times more return on investment than Liberty Flour. However, Crown Asia Chemicals is 2.25 times less risky than Liberty Flour. It trades about -0.06 of its potential returns per unit of risk. Liberty Flour Mills is currently generating about -0.09 per unit of risk. If you would invest 188.00 in Crown Asia Chemicals on September 14, 2024 and sell it today you would lose (6.00) from holding Crown Asia Chemicals or give up 3.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 63.64% |
Values | Daily Returns |
Crown Asia Chemicals vs. Liberty Flour Mills
Performance |
Timeline |
Crown Asia Chemicals |
Liberty Flour Mills |
Crown Asia and Liberty Flour Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Crown Asia and Liberty Flour
The main advantage of trading using opposite Crown Asia and Liberty Flour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, Liberty Flour 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 Liberty Flour will offset losses from the drop in Liberty Flour's long position.Crown Asia vs. Metropolitan Bank Trust | Crown Asia vs. National Reinsurance | Crown Asia vs. Union Bank of | Crown Asia vs. Jollibee Foods Corp |
Liberty Flour vs. Metropolitan Bank Trust | Liberty Flour vs. Bank of the | Liberty Flour vs. Security Bank Corp | Liberty Flour vs. Crown Asia Chemicals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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