Correlation Between PLASTIC INDUSTRY and CIM FINANCIAL
Can any of the company-specific risk be diversified away by investing in both PLASTIC INDUSTRY and CIM FINANCIAL 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 INDUSTRY and CIM FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLASTIC INDUSTRY LTD and CIM FINANCIAL SERVICES, you can compare the effects of market volatilities on PLASTIC INDUSTRY and CIM FINANCIAL 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 INDUSTRY with a short position of CIM FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLASTIC INDUSTRY and CIM FINANCIAL.
Diversification Opportunities for PLASTIC INDUSTRY and CIM FINANCIAL
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PLASTIC and CIM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PLASTIC INDUSTRY LTD and CIM FINANCIAL SERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIM FINANCIAL SERVICES and PLASTIC INDUSTRY 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 INDUSTRY LTD are associated (or correlated) with CIM FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIM FINANCIAL SERVICES has no effect on the direction of PLASTIC INDUSTRY i.e., PLASTIC INDUSTRY and CIM FINANCIAL go up and down completely randomly.
Pair Corralation between PLASTIC INDUSTRY and CIM FINANCIAL
Assuming the 90 days trading horizon PLASTIC INDUSTRY LTD is expected to generate 1.04 times more return on investment than CIM FINANCIAL. However, PLASTIC INDUSTRY is 1.04 times more volatile than CIM FINANCIAL SERVICES. It trades about 0.1 of its potential returns per unit of risk. CIM FINANCIAL SERVICES is currently generating about 0.07 per unit of risk. If you would invest 4,395 in PLASTIC INDUSTRY LTD on November 3, 2024 and sell it today you would earn a total of 95.00 from holding PLASTIC INDUSTRY LTD or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLASTIC INDUSTRY LTD vs. CIM FINANCIAL SERVICES
Performance |
| Timeline |
| PLASTIC INDUSTRY LTD |
| CIM FINANCIAL SERVICES |
PLASTIC INDUSTRY and CIM FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLASTIC INDUSTRY and CIM FINANCIAL
The main advantage of trading using opposite PLASTIC INDUSTRY and CIM FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLASTIC INDUSTRY position performs unexpectedly, CIM FINANCIAL 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 CIM FINANCIAL will offset losses from the drop in CIM FINANCIAL's long position.| PLASTIC INDUSTRY vs. BEAU VALLON HOSPITAL | PLASTIC INDUSTRY vs. CONSTANCE HOTELS SERVICES | PLASTIC INDUSTRY vs. NATIONAL INVESTMENT TRUST | PLASTIC INDUSTRY vs. MAURITIUS CHEMICAL FERTILIZER |
| CIM FINANCIAL vs. NATIONAL INVESTMENT TRUST | CIM FINANCIAL vs. BEAU VALLON HOSPITAL | CIM FINANCIAL vs. ASTORIA INVESTMENT LTD | CIM FINANCIAL vs. QUALITY BEVERAGES LTD |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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