Correlation Between President Automobile and 2S Metal
Can any of the company-specific risk be diversified away by investing in both President Automobile and 2S Metal 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 President Automobile and 2S Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Automobile Industries and 2S Metal Public, you can compare the effects of market volatilities on President Automobile and 2S Metal 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 President Automobile with a short position of 2S Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and 2S Metal.
Diversification Opportunities for President Automobile and 2S Metal
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between President and 2S Metal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and 2S Metal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2S Metal Public and President Automobile 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 President Automobile Industries are associated (or correlated) with 2S Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2S Metal Public has no effect on the direction of President Automobile i.e., President Automobile and 2S Metal go up and down completely randomly.
Pair Corralation between President Automobile and 2S Metal
Assuming the 90 days trading horizon President Automobile Industries is expected to generate 1.03 times more return on investment than 2S Metal. However, President Automobile is 1.03 times more volatile than 2S Metal Public. It trades about -0.14 of its potential returns per unit of risk. 2S Metal Public is currently generating about -0.16 per unit of risk. If you would invest 147.00 in President Automobile Industries on September 1, 2024 and sell it today you would lose (7.00) from holding President Automobile Industries or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Automobile Industrie vs. 2S Metal Public
Performance |
| Timeline |
| President Automobile |
| 2S Metal Public |
President Automobile and 2S Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and 2S Metal
The main advantage of trading using opposite President Automobile and 2S Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, 2S Metal 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 2S Metal will offset losses from the drop in 2S Metal's long position.| President Automobile vs. Phol Dhanya Public | President Automobile vs. PTT Oil and | President Automobile vs. Pico Public | President Automobile vs. Pioneer Motor Public |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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