Correlation Between Agricultural Bank and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Agricultural Bank and THRACE PLASTICS 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 Agricultural Bank and THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agricultural Bank of and THRACE PLASTICS, you can compare the effects of market volatilities on Agricultural Bank and THRACE PLASTICS 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 Agricultural Bank with a short position of THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and THRACE PLASTICS.
Diversification Opportunities for Agricultural Bank and THRACE PLASTICS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agricultural and THRACE is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank of and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and Agricultural Bank 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 Agricultural Bank of are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Agricultural Bank i.e., Agricultural Bank and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Agricultural Bank and THRACE PLASTICS
Assuming the 90 days horizon Agricultural Bank of is expected to generate 1.46 times more return on investment than THRACE PLASTICS. However, Agricultural Bank is 1.46 times more volatile than THRACE PLASTICS. It trades about 0.01 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about -0.02 per unit of risk. If you would invest 55.00 in Agricultural Bank of on December 13, 2024 and sell it today you would earn a total of 0.00 from holding Agricultural Bank of or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agricultural Bank of vs. THRACE PLASTICS
Performance |
| Timeline |
| Agricultural Bank |
| THRACE PLASTICS |
Agricultural Bank and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agricultural Bank and THRACE PLASTICS
The main advantage of trading using opposite Agricultural Bank and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agricultural Bank position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| Agricultural Bank vs. CN MODERN DAIRY | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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