Correlation Between Global Power and Eastern Power
Can any of the company-specific risk be diversified away by investing in both Global Power and Eastern 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 Global Power and Eastern Power 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 Eastern Power Group, you can compare the effects of market volatilities on Global Power and Eastern 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 Global Power with a short position of Eastern Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Power and Eastern Power.
Diversification Opportunities for Global Power and Eastern Power
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Eastern is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Power Synergy and Eastern Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Power Group 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 Eastern Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Power Group has no effect on the direction of Global Power i.e., Global Power and Eastern Power go up and down completely randomly.
Pair Corralation between Global Power and Eastern Power
Assuming the 90 days trading horizon Global Power Synergy is expected to generate 0.46 times more return on investment than Eastern Power. However, Global Power Synergy is 2.17 times less risky than Eastern Power. It trades about 0.38 of its potential returns per unit of risk. Eastern Power Group is currently generating about -0.12 per unit of risk. If you would invest 4,075 in Global Power Synergy on September 13, 2024 and sell it today you would earn a total of 350.00 from holding Global Power Synergy or generate 8.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Power Synergy vs. Eastern Power Group
Performance |
| Timeline |
| Global Power Synergy |
| Eastern Power Group |
Global Power and Eastern Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Power and Eastern Power
The main advantage of trading using opposite Global Power and Eastern Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Power position performs unexpectedly, Eastern 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 Eastern Power will offset losses from the drop in Eastern Power's long position.| Global Power vs. WHA Public | Global Power vs. TPI Polene Power | Global Power vs. Bangkok Expressway and | Global Power vs. BGrimm Power Public |
| Eastern Power vs. BCPG Public | Eastern Power vs. Diamond Building Products | Eastern Power vs. Earth Tech Environment | Eastern Power vs. TPI Polene Power |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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