Correlation Between East Coast and Masterkool International
Can any of the company-specific risk be diversified away by investing in both East Coast and Masterkool International 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 East Coast and Masterkool International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Coast Furnitech and Masterkool International Public, you can compare the effects of market volatilities on East Coast and Masterkool International 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 East Coast with a short position of Masterkool International. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Coast and Masterkool International.
Diversification Opportunities for East Coast and Masterkool International
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between East and Masterkool is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding East Coast Furnitech and Masterkool International Publi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masterkool International and East Coast 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 East Coast Furnitech are associated (or correlated) with Masterkool International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masterkool International has no effect on the direction of East Coast i.e., East Coast and Masterkool International go up and down completely randomly.
Pair Corralation between East Coast and Masterkool International
Assuming the 90 days trading horizon East Coast Furnitech is expected to generate 0.68 times more return on investment than Masterkool International. However, East Coast Furnitech is 1.48 times less risky than Masterkool International. It trades about -0.2 of its potential returns per unit of risk. Masterkool International Public is currently generating about -0.16 per unit of risk. If you would invest 49.00 in East Coast Furnitech on September 1, 2024 and sell it today you would lose (6.00) from holding East Coast Furnitech or give up 12.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Coast Furnitech vs. Masterkool International Publi
Performance |
| Timeline |
| East Coast Furnitech |
| Masterkool International |
East Coast and Masterkool International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Coast and Masterkool International
The main advantage of trading using opposite East Coast and Masterkool International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Coast position performs unexpectedly, Masterkool International 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 Masterkool International will offset losses from the drop in Masterkool International's long position.| East Coast vs. G Capital Public | East Coast vs. Filter Vision Public | East Coast vs. Chewathai Public | East Coast vs. The Erawan Group |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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