Correlation Between President Automobile and Central Plaza
Can any of the company-specific risk be diversified away by investing in both President Automobile and Central Plaza 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 Central Plaza 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 Central Plaza Hotel, you can compare the effects of market volatilities on President Automobile and Central Plaza 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 Central Plaza. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and Central Plaza.
Diversification Opportunities for President Automobile and Central Plaza
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between President and Central is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and Central Plaza Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plaza Hotel 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 Central Plaza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plaza Hotel has no effect on the direction of President Automobile i.e., President Automobile and Central Plaza go up and down completely randomly.
Pair Corralation between President Automobile and Central Plaza
Assuming the 90 days trading horizon President Automobile Industries is expected to under-perform the Central Plaza. But the stock apears to be less risky and, when comparing its historical volatility, President Automobile Industries is 1.1 times less risky than Central Plaza. The stock trades about -0.06 of its potential returns per unit of risk. The Central Plaza Hotel is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,754 in Central Plaza Hotel on September 2, 2024 and sell it today you would lose (979.00) from holding Central Plaza Hotel or give up 20.59% 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. Central Plaza Hotel
Performance |
| Timeline |
| President Automobile |
| Central Plaza Hotel |
President Automobile and Central Plaza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and Central Plaza
The main advantage of trading using opposite President Automobile and Central Plaza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, Central Plaza 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 Central Plaza will offset losses from the drop in Central Plaza'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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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