Correlation Between Regional Container and Carabao Group
Can any of the company-specific risk be diversified away by investing in both Regional Container and Carabao Group 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 Carabao Group 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 Carabao Group Public, you can compare the effects of market volatilities on Regional Container and Carabao Group 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 Carabao Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and Carabao Group.
Diversification Opportunities for Regional Container and Carabao Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regional and Carabao is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Carabao Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carabao Group Public 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 Carabao Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carabao Group Public has no effect on the direction of Regional Container i.e., Regional Container and Carabao Group go up and down completely randomly.
Pair Corralation between Regional Container and Carabao Group
Assuming the 90 days trading horizon Regional Container Lines is expected to generate 1.67 times more return on investment than Carabao Group. However, Regional Container is 1.67 times more volatile than Carabao Group Public. It trades about 0.15 of its potential returns per unit of risk. Carabao Group Public is currently generating about 0.0 per unit of risk. If you would invest 2,478 in Regional Container Lines on August 29, 2024 and sell it today you would earn a total of 272.00 from holding Regional Container Lines or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Container Lines vs. Carabao Group Public
Performance |
| Timeline |
| Regional Container Lines |
| Carabao Group Public |
Regional Container and Carabao Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Container and Carabao Group
The main advantage of trading using opposite Regional Container and Carabao Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Container position performs unexpectedly, Carabao Group 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 Carabao Group will offset losses from the drop in Carabao Group's long position.| Regional Container vs. Tata Steel Public | Regional Container vs. Thaifoods Group Public | Regional Container vs. TMT Steel Public | Regional Container vs. The Erawan Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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