Correlation Between President Automobile and BA Airport
Can any of the company-specific risk be diversified away by investing in both President Automobile and BA Airport 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 BA Airport 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 BA Airport Leasehold, you can compare the effects of market volatilities on President Automobile and BA Airport 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 BA Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and BA Airport.
Diversification Opportunities for President Automobile and BA Airport
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between President and BAREIT is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and BA Airport Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BA Airport Leasehold 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 BA Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BA Airport Leasehold has no effect on the direction of President Automobile i.e., President Automobile and BA Airport go up and down completely randomly.
Pair Corralation between President Automobile and BA Airport
Assuming the 90 days trading horizon President Automobile Industries is expected to generate 1.89 times more return on investment than BA Airport. However, President Automobile is 1.89 times more volatile than BA Airport Leasehold. It trades about 0.05 of its potential returns per unit of risk. BA Airport Leasehold is currently generating about 0.0 per unit of risk. If you would invest 138.00 in President Automobile Industries on September 12, 2024 and sell it today you would earn a total of 2.00 from holding President Automobile Industries or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Automobile Industrie vs. BA Airport Leasehold
Performance |
| Timeline |
| President Automobile |
| BA Airport Leasehold |
President Automobile and BA Airport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and BA Airport
The main advantage of trading using opposite President Automobile and BA Airport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, BA Airport 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 BA Airport will offset losses from the drop in BA Airport's long position.| President Automobile vs. Thai Stanley Electric | President Automobile vs. Somboon Advance Technology | President Automobile vs. Thai Steel Cable |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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