Correlation Between Power Solution and Panjawattana Plastic
Can any of the company-specific risk be diversified away by investing in both Power Solution and Panjawattana Plastic 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 Power Solution and Panjawattana Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Solution Technologies and Panjawattana Plastic Public, you can compare the effects of market volatilities on Power Solution and Panjawattana Plastic 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 Power Solution with a short position of Panjawattana Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Solution and Panjawattana Plastic.
Diversification Opportunities for Power Solution and Panjawattana Plastic
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and Panjawattana is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Power Solution Technologies and Panjawattana Plastic Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panjawattana Plastic and Power Solution 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 Power Solution Technologies are associated (or correlated) with Panjawattana Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panjawattana Plastic has no effect on the direction of Power Solution i.e., Power Solution and Panjawattana Plastic go up and down completely randomly.
Pair Corralation between Power Solution and Panjawattana Plastic
Assuming the 90 days trading horizon Power Solution Technologies is expected to under-perform the Panjawattana Plastic. In addition to that, Power Solution is 2.5 times more volatile than Panjawattana Plastic Public. It trades about -0.25 of its total potential returns per unit of risk. Panjawattana Plastic Public is currently generating about -0.16 per unit of volatility. If you would invest 260.00 in Panjawattana Plastic Public on August 29, 2024 and sell it today you would lose (10.00) from holding Panjawattana Plastic Public or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Solution Technologies vs. Panjawattana Plastic Public
Performance |
| Timeline |
| Power Solution Techn |
| Panjawattana Plastic |
Power Solution and Panjawattana Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Solution and Panjawattana Plastic
The main advantage of trading using opposite Power Solution and Panjawattana Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Solution position performs unexpectedly, Panjawattana Plastic 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 Panjawattana Plastic will offset losses from the drop in Panjawattana Plastic's long position.| Power Solution vs. WHA Public | Power Solution vs. Siri Prime Office | Power Solution vs. Ananda Development Public | Power Solution vs. Bangkok Land Public |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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