Correlation Between Regional Container and SE Education
Can any of the company-specific risk be diversified away by investing in both Regional Container and SE Education 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 SE Education 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 SE Education Public, you can compare the effects of market volatilities on Regional Container and SE Education 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 SE Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and SE Education.
Diversification Opportunities for Regional Container and SE Education
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Regional and SE-ED is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and SE Education Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SE Education 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 SE Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SE Education Public has no effect on the direction of Regional Container i.e., Regional Container and SE Education go up and down completely randomly.
Pair Corralation between Regional Container and SE Education
Assuming the 90 days trading horizon Regional Container Lines is expected to under-perform the SE Education. But the stock apears to be less risky and, when comparing its historical volatility, Regional Container Lines is 1.02 times less risky than SE Education. The stock trades about -0.45 of its potential returns per unit of risk. The SE Education Public is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 208.00 in SE Education Public on November 3, 2024 and sell it today you would lose (10.00) from holding SE Education Public or give up 4.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Container Lines vs. SE Education Public
Performance |
| Timeline |
| Regional Container Lines |
| SE Education Public |
Regional Container and SE Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Container and SE Education
The main advantage of trading using opposite Regional Container and SE Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Container position performs unexpectedly, SE Education 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 SE Education will offset losses from the drop in SE Education's long position.| Regional Container vs. Thoresen Thai Agencies | Regional Container vs. The Siam Cement | Regional Container vs. PTT Public | Regional Container vs. Land and Houses |
| SE Education vs. Bangkok Bank Public | SE Education vs. Kasikornbank Public | SE Education vs. Kasikornbank Public | SE Education vs. Krung Thai Bank |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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