Correlation Between PLASTIC INDUSTRY and ELITE MEAT
Can any of the company-specific risk be diversified away by investing in both PLASTIC INDUSTRY and ELITE MEAT 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 ELITE MEAT 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 ELITE MEAT PROCESSORS, you can compare the effects of market volatilities on PLASTIC INDUSTRY and ELITE MEAT 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 ELITE MEAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLASTIC INDUSTRY and ELITE MEAT.
Diversification Opportunities for PLASTIC INDUSTRY and ELITE MEAT
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between PLASTIC and ELITE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PLASTIC INDUSTRY LTD and ELITE MEAT PROCESSORS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELITE MEAT PROCESSORS 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 ELITE MEAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELITE MEAT PROCESSORS has no effect on the direction of PLASTIC INDUSTRY i.e., PLASTIC INDUSTRY and ELITE MEAT go up and down completely randomly.
Pair Corralation between PLASTIC INDUSTRY and ELITE MEAT
Assuming the 90 days trading horizon PLASTIC INDUSTRY is expected to generate 2.37 times less return on investment than ELITE MEAT. In addition to that, PLASTIC INDUSTRY is 1.15 times more volatile than ELITE MEAT PROCESSORS. It trades about 0.1 of its total potential returns per unit of risk. ELITE MEAT PROCESSORS is currently generating about 0.27 per unit of volatility. If you would invest 185.00 in ELITE MEAT PROCESSORS on November 4, 2024 and sell it today you would earn a total of 10.00 from holding ELITE MEAT PROCESSORS or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLASTIC INDUSTRY LTD vs. ELITE MEAT PROCESSORS
Performance |
| Timeline |
| PLASTIC INDUSTRY LTD |
| ELITE MEAT PROCESSORS |
PLASTIC INDUSTRY and ELITE MEAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLASTIC INDUSTRY and ELITE MEAT
The main advantage of trading using opposite PLASTIC INDUSTRY and ELITE MEAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLASTIC INDUSTRY position performs unexpectedly, ELITE MEAT 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 ELITE MEAT will offset losses from the drop in ELITE MEAT'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 |
| ELITE MEAT vs. FINCORP INVESTMENT LTD | ELITE MEAT vs. MCB GROUP LIMITED | ELITE MEAT vs. MCB GROUP LTD | ELITE MEAT vs. LOTTOTECH 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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