Correlation Between Pha Lai and Elcom Technology
Can any of the company-specific risk be diversified away by investing in both Pha Lai and Elcom Technology 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 Elcom Technology 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 Elcom Technology Communications, you can compare the effects of market volatilities on Pha Lai and Elcom Technology 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 Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Elcom Technology.
Diversification Opportunities for Pha Lai and Elcom Technology
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pha and Elcom is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com 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 Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Pha Lai i.e., Pha Lai and Elcom Technology go up and down completely randomly.
Pair Corralation between Pha Lai and Elcom Technology
Assuming the 90 days trading horizon Pha Lai Thermal is expected to under-perform the Elcom Technology. But the stock apears to be less risky and, when comparing its historical volatility, Pha Lai Thermal is 1.12 times less risky than Elcom Technology. The stock trades about -0.36 of its potential returns per unit of risk. The Elcom Technology Communications is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,500,000 in Elcom Technology Communications on September 1, 2024 and sell it today you would earn a total of 120,000 from holding Elcom Technology Communications or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. Elcom Technology Communication
Performance |
| Timeline |
| Pha Lai Thermal |
| Elcom Technology Com |
Pha Lai and Elcom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and Elcom Technology
The main advantage of trading using opposite Pha Lai and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, Elcom Technology 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 Elcom Technology will offset losses from the drop in Elcom Technology's long position.The idea behind Pha Lai Thermal and Elcom Technology Communications 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.| Elcom Technology vs. Pha Lai Thermal | Elcom Technology vs. Hochiminh City Metal | Elcom Technology vs. Vietnam Petroleum Transport | Elcom Technology vs. Transport and Industry |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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