Correlation Between PLASTIC INDUSTRY and NATIONAL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both PLASTIC INDUSTRY and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT 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 NATIONAL INVESTMENT TRUST, you can compare the effects of market volatilities on PLASTIC INDUSTRY and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLASTIC INDUSTRY and NATIONAL INVESTMENT.
Diversification Opportunities for PLASTIC INDUSTRY and NATIONAL INVESTMENT
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PLASTIC and NATIONAL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PLASTIC INDUSTRY LTD and NATIONAL INVESTMENT TRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT TRUST 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 NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT TRUST has no effect on the direction of PLASTIC INDUSTRY i.e., PLASTIC INDUSTRY and NATIONAL INVESTMENT go up and down completely randomly.
Pair Corralation between PLASTIC INDUSTRY and NATIONAL INVESTMENT
Assuming the 90 days trading horizon PLASTIC INDUSTRY LTD is expected to generate 0.57 times more return on investment than NATIONAL INVESTMENT. However, PLASTIC INDUSTRY LTD is 1.74 times less risky than NATIONAL INVESTMENT. It trades about 0.13 of its potential returns per unit of risk. NATIONAL INVESTMENT TRUST is currently generating about 0.03 per unit of risk. If you would invest 3,600 in PLASTIC INDUSTRY LTD on August 28, 2024 and sell it today you would earn a total of 650.00 from holding PLASTIC INDUSTRY LTD or generate 18.06% 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. NATIONAL INVESTMENT TRUST
Performance |
| Timeline |
| PLASTIC INDUSTRY LTD |
| NATIONAL INVESTMENT TRUST |
PLASTIC INDUSTRY and NATIONAL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLASTIC INDUSTRY and NATIONAL INVESTMENT
The main advantage of trading using opposite PLASTIC INDUSTRY and NATIONAL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLASTIC INDUSTRY position performs unexpectedly, NATIONAL INVESTMENT 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 NATIONAL INVESTMENT will offset losses from the drop in NATIONAL INVESTMENT's long position.| PLASTIC INDUSTRY vs. MCB GROUP LTD | PLASTIC INDUSTRY vs. LOTTOTECH LTD | PLASTIC INDUSTRY vs. NEW MAURITIUS HOTELS | PLASTIC INDUSTRY vs. MIWA SUGAR LIMITED |
| NATIONAL INVESTMENT vs. MCB GROUP LTD | NATIONAL INVESTMENT vs. LOTTOTECH LTD | NATIONAL INVESTMENT vs. NEW MAURITIUS HOTELS | NATIONAL INVESTMENT vs. MIWA SUGAR LIMITED |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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