Correlation Between Eastern Technical and CK Power
Can any of the company-specific risk be diversified away by investing in both Eastern Technical and CK 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 Eastern Technical and CK Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Technical Engineering and CK Power Public, you can compare the effects of market volatilities on Eastern Technical and CK 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 Eastern Technical with a short position of CK Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Technical and CK Power.
Diversification Opportunities for Eastern Technical and CK Power
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and CKP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and CK Power Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Power Public and Eastern Technical 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 Technical Engineering are associated (or correlated) with CK Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Power Public has no effect on the direction of Eastern Technical i.e., Eastern Technical and CK Power go up and down completely randomly.
Pair Corralation between Eastern Technical and CK Power
Assuming the 90 days trading horizon Eastern Technical Engineering is expected to generate 1.01 times more return on investment than CK Power. However, Eastern Technical is 1.01 times more volatile than CK Power Public. It trades about -0.17 of its potential returns per unit of risk. CK Power Public is currently generating about -0.18 per unit of risk. If you would invest 97.00 in Eastern Technical Engineering on September 12, 2024 and sell it today you would lose (7.00) from holding Eastern Technical Engineering or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Technical Engineering vs. CK Power Public
Performance |
| Timeline |
| Eastern Technical |
| CK Power Public |
Eastern Technical and CK Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Technical and CK Power
The main advantage of trading using opposite Eastern Technical and CK Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Technical position performs unexpectedly, CK 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 CK Power will offset losses from the drop in CK Power's long position.| Eastern Technical vs. G Capital Public | Eastern Technical vs. Fortune Parts Industry | Eastern Technical vs. Hydrotek Public | Eastern Technical vs. Ama Marine Public |
| CK Power vs. WHA Public | CK Power vs. Global Power Synergy | CK Power vs. TPI Polene Power | CK Power vs. Bangkok Expressway and |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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