Correlation Between Pha Lai and Phat Dat
Can any of the company-specific risk be diversified away by investing in both Pha Lai and Phat Dat 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 Phat Dat 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 Phat Dat Real, you can compare the effects of market volatilities on Pha Lai and Phat Dat 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 Phat Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Phat Dat.
Diversification Opportunities for Pha Lai and Phat Dat
Significant diversification
The 3 months correlation between Pha and Phat is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Phat Dat Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phat Dat Real 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 Phat Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phat Dat Real has no effect on the direction of Pha Lai i.e., Pha Lai and Phat Dat go up and down completely randomly.
Pair Corralation between Pha Lai and Phat Dat
Assuming the 90 days trading horizon Pha Lai Thermal is expected to under-perform the Phat Dat. But the stock apears to be less risky and, when comparing its historical volatility, Pha Lai Thermal is 1.32 times less risky than Phat Dat. The stock trades about -0.14 of its potential returns per unit of risk. The Phat Dat Real is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,580,000 in Phat Dat Real on September 2, 2024 and sell it today you would lose (460,000) from holding Phat Dat Real or give up 17.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. Phat Dat Real
Performance |
| Timeline |
| Pha Lai Thermal |
| Phat Dat Real |
Pha Lai and Phat Dat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and Phat Dat
The main advantage of trading using opposite Pha Lai and Phat Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, Phat Dat 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 Phat Dat will offset losses from the drop in Phat Dat's long position.The idea behind Pha Lai Thermal and Phat Dat Real 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.| Phat Dat vs. FIT INVEST JSC | Phat Dat vs. Damsan JSC | Phat Dat vs. An Phat Plastic | Phat Dat 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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