Correlation Between President Automobile and NAT ABSOLUTE
Can any of the company-specific risk be diversified away by investing in both President Automobile and NAT ABSOLUTE 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 NAT ABSOLUTE 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 NAT ABSOLUTE TECHNOLOGIES, you can compare the effects of market volatilities on President Automobile and NAT ABSOLUTE 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 NAT ABSOLUTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and NAT ABSOLUTE.
Diversification Opportunities for President Automobile and NAT ABSOLUTE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between President and NAT is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and NAT ABSOLUTE TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAT ABSOLUTE TECHNOLOGIES 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 NAT ABSOLUTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAT ABSOLUTE TECHNOLOGIES has no effect on the direction of President Automobile i.e., President Automobile and NAT ABSOLUTE go up and down completely randomly.
Pair Corralation between President Automobile and NAT ABSOLUTE
Assuming the 90 days trading horizon President Automobile Industries is expected to generate 1.58 times more return on investment than NAT ABSOLUTE. However, President Automobile is 1.58 times more volatile than NAT ABSOLUTE TECHNOLOGIES. It trades about -0.22 of its potential returns per unit of risk. NAT ABSOLUTE TECHNOLOGIES is currently generating about -0.47 per unit of risk. If you would invest 150.00 in President Automobile Industries on August 29, 2024 and sell it today you would lose (11.00) from holding President Automobile Industries or give up 7.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
President Automobile Industrie vs. NAT ABSOLUTE TECHNOLOGIES
Performance |
| Timeline |
| President Automobile |
| NAT ABSOLUTE TECHNOLOGIES |
President Automobile and NAT ABSOLUTE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and NAT ABSOLUTE
The main advantage of trading using opposite President Automobile and NAT ABSOLUTE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, NAT ABSOLUTE 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 NAT ABSOLUTE will offset losses from the drop in NAT ABSOLUTE's long position.| President Automobile vs. Thai Stanley Electric | President Automobile vs. Somboon Advance Technology | President Automobile vs. PCS Machine Group | President Automobile vs. Fortune Parts Industry |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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