Correlation Between Diamond Building and Yong Concrete
Can any of the company-specific risk be diversified away by investing in both Diamond Building and Yong Concrete 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 Yong Concrete 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 Yong Concrete PCL, you can compare the effects of market volatilities on Diamond Building and Yong Concrete 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 Yong Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Building and Yong Concrete.
Diversification Opportunities for Diamond Building and Yong Concrete
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diamond and Yong is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Building Products and Yong Concrete PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Concrete PCL 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 Yong Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Concrete PCL has no effect on the direction of Diamond Building i.e., Diamond Building and Yong Concrete go up and down completely randomly.
Pair Corralation between Diamond Building and Yong Concrete
Assuming the 90 days trading horizon Diamond Building Products is expected to generate 0.24 times more return on investment than Yong Concrete. However, Diamond Building Products is 4.18 times less risky than Yong Concrete. It trades about -0.24 of its potential returns per unit of risk. Yong Concrete PCL is currently generating about -0.2 per unit of risk. If you would invest 795.00 in Diamond Building Products on September 3, 2024 and sell it today you would lose (25.00) from holding Diamond Building Products or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Building Products vs. Yong Concrete PCL
Performance |
| Timeline |
| Diamond Building Products |
| Yong Concrete PCL |
Diamond Building and Yong Concrete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Building and Yong Concrete
The main advantage of trading using opposite Diamond Building and Yong Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Building position performs unexpectedly, Yong Concrete 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 Yong Concrete will offset losses from the drop in Yong Concrete's long position.| Diamond Building vs. PTT Public | Diamond Building vs. PTT Exploration and | Diamond Building vs. The Siam Cement | Diamond Building vs. CP ALL Public |
| Yong Concrete vs. Exotic Food Public | Yong Concrete vs. Knight Club Capital | Yong Concrete vs. North East Rubbers | Yong Concrete vs. Yggdrazil Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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