Correlation Between Pha Le and Ba Ria
Can any of the company-specific risk be diversified away by investing in both Pha Le and Ba Ria 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 Pha Le and Ba Ria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pha Le Plastics and Ba Ria Thermal, you can compare the effects of market volatilities on Pha Le and Ba Ria 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 Pha Le with a short position of Ba Ria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Ba Ria.
Diversification Opportunities for Pha Le and Ba Ria
Average diversification
The 3 months correlation between Pha and BTP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Ba Ria Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ba Ria Thermal and Pha Le 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 Pha Le Plastics are associated (or correlated) with Ba Ria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ba Ria Thermal has no effect on the direction of Pha Le i.e., Pha Le and Ba Ria go up and down completely randomly.
Pair Corralation between Pha Le and Ba Ria
Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 2.41 times more return on investment than Ba Ria. However, Pha Le is 2.41 times more volatile than Ba Ria Thermal. It trades about 0.07 of its potential returns per unit of risk. Ba Ria Thermal is currently generating about -0.03 per unit of risk. If you would invest 500,000 in Pha Le Plastics on November 7, 2024 and sell it today you would earn a total of 9,000 from holding Pha Le Plastics or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Le Plastics vs. Ba Ria Thermal
Performance |
| Timeline |
| Pha Le Plastics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Ba Ria Thermal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Pha Le and Ba Ria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and Ba Ria
The main advantage of trading using opposite Pha Le and Ba Ria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le position performs unexpectedly, Ba Ria 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 Ba Ria will offset losses from the drop in Ba Ria's long position.The idea behind Pha Le Plastics and Ba Ria Thermal 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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