Correlation Between Pha Lai and South Basic
Can any of the company-specific risk be diversified away by investing in both Pha Lai and South Basic 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 South Basic 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 South Basic Chemicals, you can compare the effects of market volatilities on Pha Lai and South Basic 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 South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and South Basic.
Diversification Opportunities for Pha Lai and South Basic
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pha and South is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals 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 South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of Pha Lai i.e., Pha Lai and South Basic go up and down completely randomly.
Pair Corralation between Pha Lai and South Basic
Assuming the 90 days trading horizon Pha Lai Thermal is expected to generate 0.28 times more return on investment than South Basic. However, Pha Lai Thermal is 3.55 times less risky than South Basic. It trades about -0.01 of its potential returns per unit of risk. South Basic Chemicals is currently generating about -0.05 per unit of risk. If you would invest 1,223,691 in Pha Lai Thermal on August 29, 2024 and sell it today you would lose (108,691) from holding Pha Lai Thermal or give up 8.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. South Basic Chemicals
Performance |
| Timeline |
| Pha Lai Thermal |
| South Basic Chemicals |
Pha Lai and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and South Basic
The main advantage of trading using opposite Pha Lai and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.| Pha Lai vs. FIT INVEST JSC | Pha Lai vs. Damsan JSC | Pha Lai vs. An Phat Plastic | Pha Lai vs. APG Securities Joint |
| South Basic vs. FIT INVEST JSC | South Basic vs. Damsan JSC | South Basic vs. An Phat Plastic | South Basic vs. APG Securities Joint |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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