Correlation Between Power Line and Permsin Steel
Can any of the company-specific risk be diversified away by investing in both Power Line and Permsin Steel 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 Power Line and Permsin Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Line Engineering and Permsin Steel Works, you can compare the effects of market volatilities on Power Line and Permsin Steel 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 Power Line with a short position of Permsin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Line and Permsin Steel.
Diversification Opportunities for Power Line and Permsin Steel
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and Permsin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Power Line Engineering and Permsin Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permsin Steel Works and Power Line 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 Power Line Engineering are associated (or correlated) with Permsin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permsin Steel Works has no effect on the direction of Power Line i.e., Power Line and Permsin Steel go up and down completely randomly.
Pair Corralation between Power Line and Permsin Steel
Assuming the 90 days trading horizon Power Line is expected to generate 1.0 times less return on investment than Permsin Steel. In addition to that, Power Line is 1.0 times more volatile than Permsin Steel Works. It trades about 0.04 of its total potential returns per unit of risk. Permsin Steel Works is currently generating about 0.04 per unit of volatility. If you would invest 124.00 in Permsin Steel Works on September 3, 2024 and sell it today you would lose (59.00) from holding Permsin Steel Works or give up 47.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Line Engineering vs. Permsin Steel Works
Performance |
| Timeline |
| Power Line Engineering |
| Permsin Steel Works |
Power Line and Permsin Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Line and Permsin Steel
The main advantage of trading using opposite Power Line and Permsin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Line position performs unexpectedly, Permsin Steel 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 Permsin Steel will offset losses from the drop in Permsin Steel's long position.| Power Line vs. Asia Aviation Public | Power Line vs. Bangkok Dusit Medical | Power Line vs. Bangkok Expressway and | Power Line vs. Airports of Thailand |
| Permsin Steel vs. PTT Public | Permsin Steel vs. PTT Exploration and | Permsin Steel vs. The Siam Cement | Permsin Steel vs. CP ALL Public |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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