Correlation Between Energy Absolute and Eastern Power
Can any of the company-specific risk be diversified away by investing in both Energy Absolute and Eastern 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 Eastern 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 Eastern Power Group, you can compare the effects of market volatilities on Energy Absolute and Eastern 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 Eastern Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Absolute and Eastern Power.
Diversification Opportunities for Energy Absolute and Eastern Power
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Eastern is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and Eastern Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Power Group 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 Eastern Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Power Group has no effect on the direction of Energy Absolute i.e., Energy Absolute and Eastern Power go up and down completely randomly.
Pair Corralation between Energy Absolute and Eastern Power
Assuming the 90 days horizon Energy Absolute Public is expected to under-perform the Eastern Power. In addition to that, Energy Absolute is 2.74 times more volatile than Eastern Power Group. It trades about -0.14 of its total potential returns per unit of risk. Eastern Power Group is currently generating about -0.12 per unit of volatility. If you would invest 194.00 in Eastern Power Group on September 13, 2024 and sell it today you would lose (12.00) from holding Eastern Power Group or give up 6.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Absolute Public vs. Eastern Power Group
Performance |
| Timeline |
| Energy Absolute Public |
| Eastern Power Group |
Energy Absolute and Eastern Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Absolute and Eastern Power
The main advantage of trading using opposite Energy Absolute and Eastern Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Absolute position performs unexpectedly, Eastern 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 Eastern Power will offset losses from the drop in Eastern Power's long position.| Energy Absolute vs. Bangchak Public | Energy Absolute vs. IRPC Public | Energy Absolute vs. PTT Exploration and | Energy Absolute vs. Star Petroleum Refining |
| Eastern Power vs. BCPG Public | Eastern Power vs. Diamond Building Products | Eastern Power vs. Earth Tech Environment | Eastern Power vs. TPI Polene Power |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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