Correlation Between Crown Asia and STI Education
Can any of the company-specific risk be diversified away by investing in both Crown Asia and STI Education 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 STI Education 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 STI Education Systems, you can compare the effects of market volatilities on Crown Asia and STI Education 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 STI Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and STI Education.
Diversification Opportunities for Crown Asia and STI Education
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Crown and STI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and STI Education Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Education Systems 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 STI Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Education Systems has no effect on the direction of Crown Asia i.e., Crown Asia and STI Education go up and down completely randomly.
Pair Corralation between Crown Asia and STI Education
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to under-perform the STI Education. But the stock apears to be less risky and, when comparing its historical volatility, Crown Asia Chemicals is 1.49 times less risky than STI Education. The stock trades about -0.02 of its potential returns per unit of risk. The STI Education Systems is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 113.00 in STI Education Systems on August 25, 2024 and sell it today you would earn a total of 15.00 from holding STI Education Systems or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Asia Chemicals vs. STI Education Systems
Performance |
| Timeline |
| Crown Asia Chemicals |
| STI Education Systems |
Crown Asia and STI Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and STI Education
The main advantage of trading using opposite Crown Asia and STI Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, STI Education 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 STI Education will offset losses from the drop in STI Education's long position.| Crown Asia vs. Allhome Corp | Crown Asia vs. Jollibee Foods Corp | Crown Asia vs. LFM Properties Corp | Crown Asia vs. PXP Energy Corp |
| STI Education vs. Allhome Corp | STI Education vs. Altus Property Ventures | STI Education vs. AgriNurture | STI Education vs. Wilcon Depot |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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