Correlation Between Plastic Additives and Picomat Plastic
Can any of the company-specific risk be diversified away by investing in both Plastic Additives and Picomat Plastic 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 Plastic Additives and Picomat Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Additives JSC and Picomat Plastic JSC, you can compare the effects of market volatilities on Plastic Additives and Picomat Plastic 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 Plastic Additives with a short position of Picomat Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Additives and Picomat Plastic.
Diversification Opportunities for Plastic Additives and Picomat Plastic
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Plastic and Picomat is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Additives JSC and Picomat Plastic JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picomat Plastic JSC and Plastic Additives 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 Plastic Additives JSC are associated (or correlated) with Picomat Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picomat Plastic JSC has no effect on the direction of Plastic Additives i.e., Plastic Additives and Picomat Plastic go up and down completely randomly.
Pair Corralation between Plastic Additives and Picomat Plastic
Assuming the 90 days trading horizon Plastic Additives JSC is expected to generate 2.78 times more return on investment than Picomat Plastic. However, Plastic Additives is 2.78 times more volatile than Picomat Plastic JSC. It trades about 0.33 of its potential returns per unit of risk. Picomat Plastic JSC is currently generating about 0.03 per unit of risk. If you would invest 730,000 in Plastic Additives JSC on August 29, 2024 and sell it today you would earn a total of 280,000 from holding Plastic Additives JSC or generate 38.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Additives JSC vs. Picomat Plastic JSC
Performance |
| Timeline |
| Plastic Additives JSC |
| Picomat Plastic JSC |
Plastic Additives and Picomat Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Additives and Picomat Plastic
The main advantage of trading using opposite Plastic Additives and Picomat Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Additives position performs unexpectedly, Picomat Plastic 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 Picomat Plastic will offset losses from the drop in Picomat Plastic's long position.The idea behind Plastic Additives JSC and Picomat Plastic JSC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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