Correlation Between Regional Container and SCG Packaging
Can any of the company-specific risk be diversified away by investing in both Regional Container and SCG Packaging 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 SCG Packaging 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 SCG Packaging Public, you can compare the effects of market volatilities on Regional Container and SCG Packaging 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 SCG Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and SCG Packaging.
Diversification Opportunities for Regional Container and SCG Packaging
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Regional and SCG is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and SCG Packaging Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCG Packaging 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 SCG Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCG Packaging Public has no effect on the direction of Regional Container i.e., Regional Container and SCG Packaging go up and down completely randomly.
Pair Corralation between Regional Container and SCG Packaging
Assuming the 90 days trading horizon Regional Container is expected to generate 25.45 times less return on investment than SCG Packaging. But when comparing it to its historical volatility, Regional Container Lines is 16.49 times less risky than SCG Packaging. It trades about 0.02 of its potential returns per unit of risk. SCG Packaging Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,518 in SCG Packaging Public on September 3, 2024 and sell it today you would lose (3,378) from holding SCG Packaging Public or give up 61.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Container Lines vs. SCG Packaging Public
Performance |
| Timeline |
| Regional Container Lines |
| SCG Packaging Public |
Regional Container and SCG Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Container and SCG Packaging
The main advantage of trading using opposite Regional Container and SCG Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Container position performs unexpectedly, SCG Packaging 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 SCG Packaging will offset losses from the drop in SCG Packaging's long position.| Regional Container vs. Precious Shipping Public | Regional Container vs. Thoresen Thai Agencies | Regional Container vs. The Siam Cement | Regional Container vs. PTT 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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