Correlation Between Pact Group and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Pact Group and Ecofibre 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 Pact Group and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pact Group Holdings and Ecofibre, you can compare the effects of market volatilities on Pact Group and Ecofibre 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 Pact Group with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pact Group and Ecofibre.
Diversification Opportunities for Pact Group and Ecofibre
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pact and Ecofibre is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pact Group Holdings and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Pact Group 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 Pact Group Holdings are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Pact Group i.e., Pact Group and Ecofibre go up and down completely randomly.
Pair Corralation between Pact Group and Ecofibre
Assuming the 90 days trading horizon Pact Group Holdings is expected to generate 0.42 times more return on investment than Ecofibre. However, Pact Group Holdings is 2.36 times less risky than Ecofibre. It trades about -0.07 of its potential returns per unit of risk. Ecofibre is currently generating about -0.19 per unit of risk. If you would invest 82.00 in Pact Group Holdings on August 28, 2024 and sell it today you would lose (2.00) from holding Pact Group Holdings or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pact Group Holdings vs. Ecofibre
Performance |
| Timeline |
| Pact Group Holdings |
| Ecofibre |
Pact Group and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pact Group and Ecofibre
The main advantage of trading using opposite Pact Group and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pact Group position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| Pact Group vs. Mirrabooka Investments | Pact Group vs. Nova Eye Medical | Pact Group vs. MFF Capital Investments | Pact Group vs. Air New Zealand |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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