Correlation Between Paint Chemicals and Contact Financial
Can any of the company-specific risk be diversified away by investing in both Paint Chemicals and Contact Financial 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 Paint Chemicals and Contact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paint Chemicals Industries and Contact Financial Holding, you can compare the effects of market volatilities on Paint Chemicals and Contact Financial 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 Paint Chemicals with a short position of Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paint Chemicals and Contact Financial.
Diversification Opportunities for Paint Chemicals and Contact Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Paint and Contact is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Paint Chemicals Industries and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and Paint Chemicals 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 Paint Chemicals Industries are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of Paint Chemicals i.e., Paint Chemicals and Contact Financial go up and down completely randomly.
Pair Corralation between Paint Chemicals and Contact Financial
Assuming the 90 days trading horizon Paint Chemicals is expected to generate 1.87 times less return on investment than Contact Financial. But when comparing it to its historical volatility, Paint Chemicals Industries is 3.46 times less risky than Contact Financial. It trades about 0.05 of its potential returns per unit of risk. Contact Financial Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 364.00 in Contact Financial Holding on November 5, 2024 and sell it today you would earn a total of 61.00 from holding Contact Financial Holding or generate 16.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paint Chemicals Industries vs. Contact Financial Holding
Performance |
| Timeline |
| Paint Chemicals Indu |
| Contact Financial Holding |
Paint Chemicals and Contact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paint Chemicals and Contact Financial
The main advantage of trading using opposite Paint Chemicals and Contact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paint Chemicals position performs unexpectedly, Contact Financial 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 Contact Financial will offset losses from the drop in Contact Financial's long position.| Paint Chemicals vs. Atlas For Investment | Paint Chemicals vs. Egyptian Chemical Industries | Paint Chemicals vs. Egyptian Transport | Paint Chemicals vs. Sidi Kerir Petrochemicals |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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