Correlation Between President Automobile and Pato Chemical
Can any of the company-specific risk be diversified away by investing in both President Automobile and Pato Chemical 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 Pato Chemical 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 Pato Chemical Industry, you can compare the effects of market volatilities on President Automobile and Pato Chemical 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 Pato Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and Pato Chemical.
Diversification Opportunities for President Automobile and Pato Chemical
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between President and Pato is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and Pato Chemical Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pato Chemical 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 Pato Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pato Chemical Industry has no effect on the direction of President Automobile i.e., President Automobile and Pato Chemical go up and down completely randomly.
Pair Corralation between President Automobile and Pato Chemical
Assuming the 90 days trading horizon President Automobile Industries is expected to under-perform the Pato Chemical. In addition to that, President Automobile is 1.79 times more volatile than Pato Chemical Industry. It trades about -0.13 of its total potential returns per unit of risk. Pato Chemical Industry is currently generating about -0.15 per unit of volatility. If you would invest 915.00 in Pato Chemical Industry on September 2, 2024 and sell it today you would lose (65.00) from holding Pato Chemical Industry or give up 7.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.88% |
| Values | Daily Returns |
President Automobile Industrie vs. Pato Chemical Industry
Performance |
| Timeline |
| President Automobile |
| Pato Chemical Industry |
President Automobile and Pato Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and Pato Chemical
The main advantage of trading using opposite President Automobile and Pato Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, Pato Chemical 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 Pato Chemical will offset losses from the drop in Pato Chemical'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 |
| Pato Chemical vs. AAPICO Hitech Public | Pato Chemical vs. AP Public | Pato Chemical vs. Aikchol Hospital Public | Pato Chemical vs. Bank of Ayudhya |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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