Correlation Between Home Product and Global Power
Can any of the company-specific risk be diversified away by investing in both Home Product and Global 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 Home Product and Global Power 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 Global Power Synergy, you can compare the effects of market volatilities on Home Product and Global 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 Home Product with a short position of Global Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and Global Power.
Diversification Opportunities for Home Product and Global Power
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Home and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and Global Power Synergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Power Synergy 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 Global Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Power Synergy has no effect on the direction of Home Product i.e., Home Product and Global Power go up and down completely randomly.
Pair Corralation between Home Product and Global Power
Assuming the 90 days trading horizon Home Product Center is expected to generate 0.95 times more return on investment than Global Power. However, Home Product Center is 1.05 times less risky than Global Power. It trades about 0.12 of its potential returns per unit of risk. Global Power Synergy is currently generating about -0.01 per unit of risk. If you would invest 950.00 in Home Product Center on August 28, 2024 and sell it today you would earn a total of 40.00 from holding Home Product Center or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. Global Power Synergy
Performance |
| Timeline |
| Home Product Center |
| Global Power Synergy |
Home Product and Global Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and Global Power
The main advantage of trading using opposite Home Product and Global Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, Global 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 Global Power will offset losses from the drop in Global Power's long position.| Home Product vs. SCB X Public | Home Product vs. Kasikornbank Public | Home Product vs. PTT Public | Home Product vs. Kasikornbank Public |
| Global Power vs. WHA Public | Global Power vs. TPI Polene Power | Global Power vs. Bangkok Expressway and | Global Power vs. BGrimm Power Public |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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