Correlation Between Pha Lai and Asia Commercial
Can any of the company-specific risk be diversified away by investing in both Pha Lai and Asia Commercial 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 Lai and Asia Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pha Lai Thermal and Asia Commercial Bank, you can compare the effects of market volatilities on Pha Lai and Asia Commercial 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 Lai with a short position of Asia Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Asia Commercial.
Diversification Opportunities for Pha Lai and Asia Commercial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pha and Asia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Asia Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Commercial Bank and Pha Lai 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 Lai Thermal are associated (or correlated) with Asia Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Commercial Bank has no effect on the direction of Pha Lai i.e., Pha Lai and Asia Commercial go up and down completely randomly.
Pair Corralation between Pha Lai and Asia Commercial
Assuming the 90 days trading horizon Pha Lai is expected to generate 4.35 times less return on investment than Asia Commercial. But when comparing it to its historical volatility, Pha Lai Thermal is 1.05 times less risky than Asia Commercial. It trades about 0.02 of its potential returns per unit of risk. Asia Commercial Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,560,759 in Asia Commercial Bank on September 2, 2024 and sell it today you would earn a total of 959,241 from holding Asia Commercial Bank or generate 61.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. Asia Commercial Bank
Performance |
| Timeline |
| Pha Lai Thermal |
| Asia Commercial Bank |
Pha Lai and Asia Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and Asia Commercial
The main advantage of trading using opposite Pha Lai and Asia Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, Asia Commercial 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 Asia Commercial will offset losses from the drop in Asia Commercial's long position.The idea behind Pha Lai Thermal and Asia Commercial Bank 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.| Asia Commercial vs. FIT INVEST JSC | Asia Commercial vs. Damsan JSC | Asia Commercial vs. An Phat Plastic | Asia Commercial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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