Correlation Between TOTAL GABON and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and THRACE PLASTICS 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 TOTAL GABON and THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and THRACE PLASTICS, you can compare the effects of market volatilities on TOTAL GABON and THRACE PLASTICS 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 TOTAL GABON with a short position of THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and THRACE PLASTICS.
Diversification Opportunities for TOTAL GABON and THRACE PLASTICS
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between TOTAL and THRACE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and TOTAL GABON 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 TOTAL GABON are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between TOTAL GABON and THRACE PLASTICS
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 2.78 times more return on investment than THRACE PLASTICS. However, TOTAL GABON is 2.78 times more volatile than THRACE PLASTICS. It trades about 0.18 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.29 per unit of risk. If you would invest 15,800 in TOTAL GABON on September 4, 2024 and sell it today you would earn a total of 2,550 from holding TOTAL GABON or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. THRACE PLASTICS
Performance |
| Timeline |
| TOTAL GABON |
| THRACE PLASTICS |
TOTAL GABON and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and THRACE PLASTICS
The main advantage of trading using opposite TOTAL GABON and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.The idea behind TOTAL GABON and THRACE PLASTICS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| THRACE PLASTICS vs. BOSTON BEER A | THRACE PLASTICS vs. TYSON FOODS A | THRACE PLASTICS vs. PT Indofood Sukses | THRACE PLASTICS vs. Monster Beverage Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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