Correlation Between Global Power and Carabao Group
Can any of the company-specific risk be diversified away by investing in both Global Power and Carabao Group 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 Global Power and Carabao Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Power Synergy and Carabao Group Public, you can compare the effects of market volatilities on Global Power and Carabao Group 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 Global Power with a short position of Carabao Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Power and Carabao Group.
Diversification Opportunities for Global Power and Carabao Group
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Carabao is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Power Synergy and Carabao Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carabao Group Public and Global 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 Global Power Synergy are associated (or correlated) with Carabao Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carabao Group Public has no effect on the direction of Global Power i.e., Global Power and Carabao Group go up and down completely randomly.
Pair Corralation between Global Power and Carabao Group
Assuming the 90 days trading horizon Global Power Synergy is expected to under-perform the Carabao Group. In addition to that, Global Power is 1.08 times more volatile than Carabao Group Public. It trades about -0.02 of its total potential returns per unit of risk. Carabao Group Public is currently generating about 0.03 per unit of volatility. If you would invest 6,416 in Carabao Group Public on August 31, 2024 and sell it today you would earn a total of 1,259 from holding Carabao Group Public or generate 19.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Global Power Synergy vs. Carabao Group Public
Performance |
| Timeline |
| Global Power Synergy |
| Carabao Group Public |
Global Power and Carabao Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Power and Carabao Group
The main advantage of trading using opposite Global Power and Carabao Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Power position performs unexpectedly, Carabao Group 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 Carabao Group will offset losses from the drop in Carabao Group's long position.| Global Power vs. Energy Absolute Public | Global Power vs. BGrimm Power Public | Global Power vs. CP ALL Public | Global Power vs. PTT Public |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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