Correlation Between Polyplex (Thailand) and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both Polyplex (Thailand) and Goodyear Tire 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 Polyplex (Thailand) and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polyplex Public and The Goodyear Tire, you can compare the effects of market volatilities on Polyplex (Thailand) and Goodyear Tire 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 Polyplex (Thailand) with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polyplex (Thailand) and Goodyear Tire.
Diversification Opportunities for Polyplex (Thailand) and Goodyear Tire
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polyplex and Goodyear is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Polyplex Public and The Goodyear Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire and Polyplex (Thailand) 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 Polyplex Public are associated (or correlated) with Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire has no effect on the direction of Polyplex (Thailand) i.e., Polyplex (Thailand) and Goodyear Tire go up and down completely randomly.
Pair Corralation between Polyplex (Thailand) and Goodyear Tire
Assuming the 90 days horizon Polyplex Public is expected to generate 6.59 times more return on investment than Goodyear Tire. However, Polyplex (Thailand) is 6.59 times more volatile than The Goodyear Tire. It trades about 0.21 of its potential returns per unit of risk. The Goodyear Tire is currently generating about 0.36 per unit of risk. If you would invest 14.00 in Polyplex Public on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Polyplex Public or generate 135.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polyplex Public vs. The Goodyear Tire
Performance |
| Timeline |
| Polyplex (Thailand) |
| Goodyear Tire |
Polyplex (Thailand) and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polyplex (Thailand) and Goodyear Tire
The main advantage of trading using opposite Polyplex (Thailand) and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polyplex (Thailand) position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.| Polyplex (Thailand) vs. Strategic Education | Polyplex (Thailand) vs. Xinhua Winshare Publishing | Polyplex (Thailand) vs. TAL Education Group | Polyplex (Thailand) vs. BLUESCOPE STEEL |
| Goodyear Tire vs. SENECA FOODS A | Goodyear Tire vs. United Natural Foods | Goodyear Tire vs. National Storage Affiliates | Goodyear Tire vs. UNITED UTILITIES GR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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