Correlation Between President Automobile and Praram 9
Can any of the company-specific risk be diversified away by investing in both President Automobile and Praram 9 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 Praram 9 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 Praram 9 Hospital, you can compare the effects of market volatilities on President Automobile and Praram 9 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 Praram 9. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and Praram 9.
Diversification Opportunities for President Automobile and Praram 9
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between President and Praram is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and Praram 9 Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praram 9 Hospital 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 Praram 9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praram 9 Hospital has no effect on the direction of President Automobile i.e., President Automobile and Praram 9 go up and down completely randomly.
Pair Corralation between President Automobile and Praram 9
Assuming the 90 days trading horizon President Automobile Industries is expected to under-perform the Praram 9. But the stock apears to be less risky and, when comparing its historical volatility, President Automobile Industries is 1.15 times less risky than Praram 9. The stock trades about -0.06 of its potential returns per unit of risk. The Praram 9 Hospital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,946 in Praram 9 Hospital on November 27, 2024 and sell it today you would earn a total of 324.00 from holding Praram 9 Hospital or generate 16.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Automobile Industrie vs. Praram 9 Hospital
Performance |
| Timeline |
| President Automobile |
| Praram 9 Hospital |
President Automobile and Praram 9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and Praram 9
The main advantage of trading using opposite President Automobile and Praram 9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, Praram 9 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 Praram 9 will offset losses from the drop in Praram 9'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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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