Correlation Between North East and Yong Concrete
Can any of the company-specific risk be diversified away by investing in both North East and Yong Concrete 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 North East and Yong Concrete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North East Rubbers and Yong Concrete PCL, you can compare the effects of market volatilities on North East and Yong Concrete 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 North East with a short position of Yong Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of North East and Yong Concrete.
Diversification Opportunities for North East and Yong Concrete
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and Yong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding North East Rubbers and Yong Concrete PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Concrete PCL and North East 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 North East Rubbers are associated (or correlated) with Yong Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Concrete PCL has no effect on the direction of North East i.e., North East and Yong Concrete go up and down completely randomly.
Pair Corralation between North East and Yong Concrete
Assuming the 90 days trading horizon North East Rubbers is expected to generate 0.37 times more return on investment than Yong Concrete. However, North East Rubbers is 2.71 times less risky than Yong Concrete. It trades about -0.2 of its potential returns per unit of risk. Yong Concrete PCL is currently generating about -0.22 per unit of risk. If you would invest 505.00 in North East Rubbers on September 1, 2024 and sell it today you would lose (21.00) from holding North East Rubbers or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North East Rubbers vs. Yong Concrete PCL
Performance |
| Timeline |
| North East Rubbers |
| Yong Concrete PCL |
North East and Yong Concrete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North East and Yong Concrete
The main advantage of trading using opposite North East and Yong Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North East position performs unexpectedly, Yong Concrete 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 Yong Concrete will offset losses from the drop in Yong Concrete's long position.| North East vs. Sri Trang Agro Industry | North East vs. Jay Mart Public | North East vs. Com7 PCL | North East vs. Energy Absolute Public |
| Yong Concrete vs. Exotic Food Public | Yong Concrete vs. Knight Club Capital | Yong Concrete vs. North East Rubbers | Yong Concrete vs. Yggdrazil Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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