Correlation Between Home Product and Com7 PCL
Can any of the company-specific risk be diversified away by investing in both Home Product and Com7 PCL 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 Home Product and Com7 PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Product Center and Com7 PCL, you can compare the effects of market volatilities on Home Product and Com7 PCL 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 Home Product with a short position of Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and Com7 PCL.
Diversification Opportunities for Home Product and Com7 PCL
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Com7 is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL and Home Product 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 Home Product Center are associated (or correlated) with Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of Home Product i.e., Home Product and Com7 PCL go up and down completely randomly.
Pair Corralation between Home Product and Com7 PCL
Assuming the 90 days trading horizon Home Product is expected to generate 6.06 times less return on investment than Com7 PCL. But when comparing it to its historical volatility, Home Product Center is 1.09 times less risky than Com7 PCL. It trades about 0.03 of its potential returns per unit of risk. Com7 PCL is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,800 in Com7 PCL on August 28, 2024 and sell it today you would earn a total of 950.00 from holding Com7 PCL or generate 52.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. Com7 PCL
Performance |
| Timeline |
| Home Product Center |
| Com7 PCL |
Home Product and Com7 PCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and Com7 PCL
The main advantage of trading using opposite Home Product and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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