Correlation Between Energy Absolute and CK Power
Can any of the company-specific risk be diversified away by investing in both Energy Absolute and CK Power 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 Energy Absolute and CK Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Absolute Public and CK Power Public, you can compare the effects of market volatilities on Energy Absolute and CK Power 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 Energy Absolute with a short position of CK Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Absolute and CK Power.
Diversification Opportunities for Energy Absolute and CK Power
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and CKP is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and CK Power Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Power Public and Energy Absolute 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 Energy Absolute Public are associated (or correlated) with CK Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Power Public has no effect on the direction of Energy Absolute i.e., Energy Absolute and CK Power go up and down completely randomly.
Pair Corralation between Energy Absolute and CK Power
Assuming the 90 days horizon Energy Absolute Public is expected to under-perform the CK Power. In addition to that, Energy Absolute is 2.55 times more volatile than CK Power Public. It trades about -0.1 of its total potential returns per unit of risk. CK Power Public is currently generating about -0.03 per unit of volatility. If you would invest 452.00 in CK Power Public on August 30, 2024 and sell it today you would lose (126.00) from holding CK Power Public or give up 27.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Energy Absolute Public vs. CK Power Public
Performance |
| Timeline |
| Energy Absolute Public |
| CK Power Public |
Energy Absolute and CK Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Absolute and CK Power
The main advantage of trading using opposite Energy Absolute and CK Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Absolute position performs unexpectedly, CK Power 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 CK Power will offset losses from the drop in CK Power's long position.| Energy Absolute vs. Gulf Energy Development | Energy Absolute vs. Global Power Synergy | Energy Absolute vs. CP ALL Public | Energy Absolute vs. Bangkok Dusit Medical |
| CK Power vs. Energy Absolute Public | CK Power vs. BCPG Public | CK Power vs. Bangkok Expressway and | CK Power vs. Gulf Energy Development |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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