Correlation Between PINTHONG INDUSTRIAL and Digital Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both PINTHONG INDUSTRIAL and Digital Telecommunicatio 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 PINTHONG INDUSTRIAL and Digital Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PINTHONG INDUSTRIAL PARK and Digital Telecommunications Infrastructure, you can compare the effects of market volatilities on PINTHONG INDUSTRIAL and Digital Telecommunicatio 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 PINTHONG INDUSTRIAL with a short position of Digital Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of PINTHONG INDUSTRIAL and Digital Telecommunicatio.
Diversification Opportunities for PINTHONG INDUSTRIAL and Digital Telecommunicatio
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PINTHONG and Digital is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PINTHONG INDUSTRIAL PARK and Digital Telecommunications Inf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Telecommunicatio and PINTHONG INDUSTRIAL 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 PINTHONG INDUSTRIAL PARK are associated (or correlated) with Digital Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Telecommunicatio has no effect on the direction of PINTHONG INDUSTRIAL i.e., PINTHONG INDUSTRIAL and Digital Telecommunicatio go up and down completely randomly.
Pair Corralation between PINTHONG INDUSTRIAL and Digital Telecommunicatio
Assuming the 90 days trading horizon PINTHONG INDUSTRIAL PARK is expected to generate 2.45 times more return on investment than Digital Telecommunicatio. However, PINTHONG INDUSTRIAL is 2.45 times more volatile than Digital Telecommunications Infrastructure. It trades about 0.13 of its potential returns per unit of risk. Digital Telecommunications Infrastructure is currently generating about 0.15 per unit of risk. If you would invest 474.00 in PINTHONG INDUSTRIAL PARK on August 31, 2024 and sell it today you would earn a total of 136.00 from holding PINTHONG INDUSTRIAL PARK or generate 28.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PINTHONG INDUSTRIAL PARK vs. Digital Telecommunications Inf
Performance |
| Timeline |
| PINTHONG INDUSTRIAL PARK |
| Digital Telecommunicatio |
PINTHONG INDUSTRIAL and Digital Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PINTHONG INDUSTRIAL and Digital Telecommunicatio
The main advantage of trading using opposite PINTHONG INDUSTRIAL and Digital Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PINTHONG INDUSTRIAL position performs unexpectedly, Digital Telecommunicatio 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 Digital Telecommunicatio will offset losses from the drop in Digital Telecommunicatio's long position.The idea behind PINTHONG INDUSTRIAL PARK and Digital Telecommunications Infrastructure 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.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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