Correlation Between Eastern Power and Thachang Green
Can any of the company-specific risk be diversified away by investing in both Eastern Power and Thachang Green 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 Power and Thachang Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Power Group and Thachang Green Energy, you can compare the effects of market volatilities on Eastern Power and Thachang Green 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 Power with a short position of Thachang Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Power and Thachang Green.
Diversification Opportunities for Eastern Power and Thachang Green
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and Thachang is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Power Group and Thachang Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thachang Green Energy and Eastern Power 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 Power Group are associated (or correlated) with Thachang Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thachang Green Energy has no effect on the direction of Eastern Power i.e., Eastern Power and Thachang Green go up and down completely randomly.
Pair Corralation between Eastern Power and Thachang Green
Assuming the 90 days horizon Eastern Power Group is expected to under-perform the Thachang Green. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Power Group is 1.86 times less risky than Thachang Green. The stock trades about -0.08 of its potential returns per unit of risk. The Thachang Green Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 173.00 in Thachang Green Energy on September 5, 2024 and sell it today you would earn a total of 63.00 from holding Thachang Green Energy or generate 36.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Power Group vs. Thachang Green Energy
Performance |
| Timeline |
| Eastern Power Group |
| Thachang Green Energy |
Eastern Power and Thachang Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Power and Thachang Green
The main advantage of trading using opposite Eastern Power and Thachang Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Power position performs unexpectedly, Thachang Green 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 Thachang Green will offset losses from the drop in Thachang Green's long position.| Eastern Power vs. Gulf Energy Development | Eastern Power vs. Energy Absolute Public | Eastern Power vs. Gunkul Engineering Public | Eastern Power vs. Global Power Synergy |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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