Correlation Between Regional Container and Fine Metal
Can any of the company-specific risk be diversified away by investing in both Regional Container and Fine Metal 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 Regional Container and Fine Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Container Lines and Fine Metal Technologies, you can compare the effects of market volatilities on Regional Container and Fine Metal 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 Regional Container with a short position of Fine Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and Fine Metal.
Diversification Opportunities for Regional Container and Fine Metal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Regional and Fine is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Fine Metal Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Metal Technologies and Regional Container 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 Regional Container Lines are associated (or correlated) with Fine Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Metal Technologies has no effect on the direction of Regional Container i.e., Regional Container and Fine Metal go up and down completely randomly.
Pair Corralation between Regional Container and Fine Metal
Assuming the 90 days trading horizon Regional Container Lines is expected to generate 0.37 times more return on investment than Fine Metal. However, Regional Container Lines is 2.71 times less risky than Fine Metal. It trades about -0.17 of its potential returns per unit of risk. Fine Metal Technologies is currently generating about -0.14 per unit of risk. If you would invest 2,370 in Regional Container Lines on January 14, 2025 and sell it today you would lose (120.00) from holding Regional Container Lines or give up 5.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Container Lines vs. Fine Metal Technologies
Performance |
| Timeline |
| Regional Container Lines |
| Fine Metal Technologies |
Regional Container and Fine Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Container and Fine Metal
The main advantage of trading using opposite Regional Container and Fine Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Container position performs unexpectedly, Fine Metal 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 Fine Metal will offset losses from the drop in Fine Metal's long position.| Regional Container vs. Asia Metal Public | Regional Container vs. CHAOSUA FOODS INDUSTRY | Regional Container vs. Cal Comp Electronics Public | Regional Container vs. Chiangmai Frozen Foods |
| Fine Metal vs. WICE Logistics PCL | Fine Metal vs. Asia Aviation Public | Fine Metal vs. Humanica Public | Fine Metal vs. Jay Mart Public |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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