Correlation Between Southern Rubber and Development Investment
Can any of the company-specific risk be diversified away by investing in both Southern Rubber and Development Investment 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 Development Investment 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 Development Investment Construction, you can compare the effects of market volatilities on Southern Rubber and Development Investment 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 Development Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Development Investment.
Diversification Opportunities for Southern Rubber and Development Investment
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Southern and Development is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Development Investment Constru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Development Investment 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 Development Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Development Investment has no effect on the direction of Southern Rubber i.e., Southern Rubber and Development Investment go up and down completely randomly.
Pair Corralation between Southern Rubber and Development Investment
Assuming the 90 days trading horizon Southern Rubber Industry is expected to generate 1.14 times more return on investment than Development Investment. However, Southern Rubber is 1.14 times more volatile than Development Investment Construction. It trades about 0.04 of its potential returns per unit of risk. Development Investment Construction is currently generating about -0.04 per unit of risk. If you would invest 1,171,654 in Southern Rubber Industry on September 2, 2024 and sell it today you would earn a total of 193,346 from holding Southern Rubber Industry or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Rubber Industry vs. Development Investment Constru
Performance |
| Timeline |
| Southern Rubber Industry |
| Development Investment |
Southern Rubber and Development Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Rubber and Development Investment
The main advantage of trading using opposite Southern Rubber and Development Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber position performs unexpectedly, Development Investment 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 Development Investment will offset losses from the drop in Development Investment's long position.| Southern Rubber vs. FIT INVEST JSC | Southern Rubber vs. Damsan JSC | Southern Rubber vs. An Phat Plastic | Southern Rubber vs. Alphanam ME |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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