Correlation Between Eastern Commercial and Shangri La
Can any of the company-specific risk be diversified away by investing in both Eastern Commercial and Shangri La 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 Eastern Commercial and Shangri La into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Commercial Leasing and Shangri La Hotel Public, you can compare the effects of market volatilities on Eastern Commercial and Shangri La 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 Eastern Commercial with a short position of Shangri La. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Commercial and Shangri La.
Diversification Opportunities for Eastern Commercial and Shangri La
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastern and Shangri is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Commercial Leasing and Shangri La Hotel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotel and Eastern Commercial 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 Eastern Commercial Leasing are associated (or correlated) with Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotel has no effect on the direction of Eastern Commercial i.e., Eastern Commercial and Shangri La go up and down completely randomly.
Pair Corralation between Eastern Commercial and Shangri La
Assuming the 90 days trading horizon Eastern Commercial Leasing is expected to under-perform the Shangri La. In addition to that, Eastern Commercial is 2.95 times more volatile than Shangri La Hotel Public. It trades about -0.21 of its total potential returns per unit of risk. Shangri La Hotel Public is currently generating about -0.31 per unit of volatility. If you would invest 4,900 in Shangri La Hotel Public on November 3, 2024 and sell it today you would lose (600.00) from holding Shangri La Hotel Public or give up 12.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Eastern Commercial Leasing vs. Shangri La Hotel Public
Performance |
| Timeline |
| Eastern Commercial |
| Shangri La Hotel |
Eastern Commercial and Shangri La Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Commercial and Shangri La
The main advantage of trading using opposite Eastern Commercial and Shangri La positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Commercial position performs unexpectedly, Shangri La 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 Shangri La will offset losses from the drop in Shangri La's long position.| Eastern Commercial vs. Chai Watana Tannery | Eastern Commercial vs. EMC Public | Eastern Commercial vs. Asia Plus Group | Eastern Commercial vs. Globlex Holding Management |
| Shangri La vs. Siri Prime Office | Shangri La vs. Delta Electronics Public | Shangri La vs. Communication System Solution | Shangri La vs. Hana Microelectronics 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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