Correlation Between Post and South Basic
Can any of the company-specific risk be diversified away by investing in both Post 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 Post and South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post and Telecommunications and South Basic Chemicals, you can compare the effects of market volatilities on Post 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 Post with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post and South Basic.
Diversification Opportunities for Post and South Basic
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Post and South is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications 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 Post 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 Post and Telecommunications 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 Post i.e., Post and South Basic go up and down completely randomly.
Pair Corralation between Post and South Basic
Assuming the 90 days trading horizon Post is expected to generate 2.15 times less return on investment than South Basic. But when comparing it to its historical volatility, Post and Telecommunications is 1.09 times less risky than South Basic. It trades about 0.06 of its potential returns per unit of risk. South Basic Chemicals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,585,000 in South Basic Chemicals on September 4, 2024 and sell it today you would earn a total of 215,000 from holding South Basic Chemicals or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Post and Telecommunications vs. South Basic Chemicals
Performance |
| Timeline |
| Post and Telecommuni |
| South Basic Chemicals |
Post and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Post and South Basic
The main advantage of trading using opposite Post and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post 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.| Post vs. Vietnam Petroleum Transport | Post vs. Da Nang Construction | Post vs. 1369 Construction JSC | Post vs. PetroVietnam Transportation Corp |
| South Basic vs. Tin Nghia Industrial | South Basic vs. Vietnam Petroleum Transport | South Basic vs. DIC Holdings Construction | South Basic 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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