Correlation Between POT and Investment
Can any of the company-specific risk be diversified away by investing in both POT and 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 POT and Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PostTelecommunication Equipment and Investment and Industrial, you can compare the effects of market volatilities on POT and 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 POT with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of POT and Investment.
Diversification Opportunities for POT and Investment
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between POT and Investment is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PostTelecommunication Equipmen and Investment and Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment and Industrial and POT 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 PostTelecommunication Equipment are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment and Industrial has no effect on the direction of POT i.e., POT and Investment go up and down completely randomly.
Pair Corralation between POT and Investment
Assuming the 90 days trading horizon PostTelecommunication Equipment is expected to under-perform the Investment. In addition to that, POT is 2.82 times more volatile than Investment and Industrial. It trades about -0.1 of its total potential returns per unit of risk. Investment and Industrial is currently generating about -0.01 per unit of volatility. If you would invest 6,790,000 in Investment and Industrial on September 14, 2024 and sell it today you would lose (40,000) from holding Investment and Industrial or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.18% |
| Values | Daily Returns |
PostTelecommunication Equipmen vs. Investment and Industrial
Performance |
| Timeline |
| PostTelecommunication |
| Investment and Industrial |
POT and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POT and Investment
The main advantage of trading using opposite POT and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POT position performs unexpectedly, 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 Investment will offset losses from the drop in Investment's long position.| POT vs. Vinhomes JSC | POT vs. TDG Global Investment | POT vs. Din Capital Investment | POT vs. Thanh Dat Investment |
| Investment vs. FIT INVEST JSC | Investment vs. Damsan JSC | Investment vs. An Phat Plastic | Investment vs. Alphanam ME |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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