Correlation Between Micro Leasing and East Coast
Can any of the company-specific risk be diversified away by investing in both Micro Leasing and East Coast 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 Micro Leasing and East Coast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micro Leasing Public and East Coast Furnitech, you can compare the effects of market volatilities on Micro Leasing and East Coast 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 Micro Leasing with a short position of East Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Leasing and East Coast.
Diversification Opportunities for Micro Leasing and East Coast
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Micro and East is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Micro Leasing Public and East Coast Furnitech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Coast Furnitech and Micro Leasing 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 Micro Leasing Public are associated (or correlated) with East Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Coast Furnitech has no effect on the direction of Micro Leasing i.e., Micro Leasing and East Coast go up and down completely randomly.
Pair Corralation between Micro Leasing and East Coast
Assuming the 90 days trading horizon Micro Leasing Public is expected to under-perform the East Coast. In addition to that, Micro Leasing is 1.13 times more volatile than East Coast Furnitech. It trades about -0.44 of its total potential returns per unit of risk. East Coast Furnitech is currently generating about -0.09 per unit of volatility. If you would invest 47.00 in East Coast Furnitech on August 31, 2024 and sell it today you would lose (3.00) from holding East Coast Furnitech or give up 6.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micro Leasing Public vs. East Coast Furnitech
Performance |
| Timeline |
| Micro Leasing Public |
| East Coast Furnitech |
Micro Leasing and East Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micro Leasing and East Coast
The main advantage of trading using opposite Micro Leasing and East Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micro Leasing position performs unexpectedly, East Coast 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 East Coast will offset losses from the drop in East Coast's long position.| Micro Leasing vs. East Coast Furnitech | Micro Leasing vs. Filter Vision Public | Micro Leasing vs. Cho Thavee Public | Micro Leasing vs. Akkhie Prakarn Public |
| East Coast vs. G Capital Public | East Coast vs. Filter Vision Public | East Coast vs. Chewathai Public | East Coast vs. The Erawan Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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