Correlation Between President Automobile and CHAOSUA FOODS
Can any of the company-specific risk be diversified away by investing in both President Automobile and CHAOSUA FOODS 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 CHAOSUA FOODS 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 CHAOSUA FOODS INDUSTRY, you can compare the effects of market volatilities on President Automobile and CHAOSUA FOODS 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 CHAOSUA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and CHAOSUA FOODS.
Diversification Opportunities for President Automobile and CHAOSUA FOODS
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between President and CHAOSUA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and CHAOSUA FOODS INDUSTRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAOSUA FOODS INDUSTRY 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 CHAOSUA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAOSUA FOODS INDUSTRY has no effect on the direction of President Automobile i.e., President Automobile and CHAOSUA FOODS go up and down completely randomly.
Pair Corralation between President Automobile and CHAOSUA FOODS
Assuming the 90 days trading horizon President Automobile Industries is expected to generate 0.44 times more return on investment than CHAOSUA FOODS. However, President Automobile Industries is 2.26 times less risky than CHAOSUA FOODS. It trades about -0.05 of its potential returns per unit of risk. CHAOSUA FOODS INDUSTRY is currently generating about -0.18 per unit of risk. If you would invest 161.00 in President Automobile Industries on August 28, 2024 and sell it today you would lose (22.00) from holding President Automobile Industries or give up 13.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 47.76% |
| Values | Daily Returns |
President Automobile Industrie vs. CHAOSUA FOODS INDUSTRY
Performance |
| Timeline |
| President Automobile |
| CHAOSUA FOODS INDUSTRY |
President Automobile and CHAOSUA FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and CHAOSUA FOODS
The main advantage of trading using opposite President Automobile and CHAOSUA FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, CHAOSUA FOODS 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 CHAOSUA FOODS will offset losses from the drop in CHAOSUA FOODS'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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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