Correlation Between Diamond Building and 2S Metal
Can any of the company-specific risk be diversified away by investing in both Diamond Building and 2S Metal 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 Diamond Building and 2S Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Building Products and 2S Metal Public, you can compare the effects of market volatilities on Diamond Building and 2S Metal 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 Diamond Building with a short position of 2S Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Building and 2S Metal.
Diversification Opportunities for Diamond Building and 2S Metal
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamond and 2S Metal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Building Products and 2S Metal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2S Metal Public and Diamond Building 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 Diamond Building Products are associated (or correlated) with 2S Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2S Metal Public has no effect on the direction of Diamond Building i.e., Diamond Building and 2S Metal go up and down completely randomly.
Pair Corralation between Diamond Building and 2S Metal
Assuming the 90 days trading horizon Diamond Building Products is expected to generate 0.46 times more return on investment than 2S Metal. However, Diamond Building Products is 2.18 times less risky than 2S Metal. It trades about -0.17 of its potential returns per unit of risk. 2S Metal Public is currently generating about -0.19 per unit of risk. If you would invest 790.00 in Diamond Building Products on August 28, 2024 and sell it today you would lose (20.00) from holding Diamond Building Products or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Building Products vs. 2S Metal Public
Performance |
| Timeline |
| Diamond Building Products |
| 2S Metal Public |
Diamond Building and 2S Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Building and 2S Metal
The main advantage of trading using opposite Diamond Building and 2S Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Building position performs unexpectedly, 2S Metal 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 2S Metal will offset losses from the drop in 2S Metal's long position.| Diamond Building vs. PTT Public | Diamond Building vs. PTT Exploration and | Diamond Building vs. CP ALL Public | Diamond Building vs. Kasikornbank Public |
| 2S Metal vs. Tata Steel Public | 2S Metal vs. G J Steel | 2S Metal vs. TMT Steel Public | 2S Metal vs. MCS Steel Public |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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