Correlation Between Southern Rubber and Cotec Construction
Can any of the company-specific risk be diversified away by investing in both Southern Rubber and Cotec Construction 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 Southern Rubber and Cotec Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Rubber Industry and Cotec Construction JSC, you can compare the effects of market volatilities on Southern Rubber and Cotec Construction 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 Southern Rubber with a short position of Cotec Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Cotec Construction.
Diversification Opportunities for Southern Rubber and Cotec Construction
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Cotec is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Cotec Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cotec Construction JSC and Southern Rubber 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 Southern Rubber Industry are associated (or correlated) with Cotec Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cotec Construction JSC has no effect on the direction of Southern Rubber i.e., Southern Rubber and Cotec Construction go up and down completely randomly.
Pair Corralation between Southern Rubber and Cotec Construction
Assuming the 90 days trading horizon Southern Rubber Industry is expected to generate 2.1 times more return on investment than Cotec Construction. However, Southern Rubber is 2.1 times more volatile than Cotec Construction JSC. It trades about 0.13 of its potential returns per unit of risk. Cotec Construction JSC is currently generating about 0.23 per unit of risk. If you would invest 1,290,000 in Southern Rubber Industry on October 26, 2024 and sell it today you would earn a total of 175,000 from holding Southern Rubber Industry or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Rubber Industry vs. Cotec Construction JSC
Performance |
| Timeline |
| Southern Rubber Industry |
| Cotec Construction JSC |
Southern Rubber and Cotec Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Rubber and Cotec Construction
The main advantage of trading using opposite Southern Rubber and Cotec Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber position performs unexpectedly, Cotec Construction 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 Cotec Construction will offset losses from the drop in Cotec Construction's long position.| Southern Rubber vs. FIT INVEST JSC | Southern Rubber vs. Damsan JSC | Southern Rubber vs. An Phat Plastic | Southern Rubber vs. APG Securities Joint |
| Cotec Construction vs. FIT INVEST JSC | Cotec Construction vs. Damsan JSC | Cotec Construction vs. An Phat Plastic | Cotec Construction vs. APG Securities Joint |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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