Correlation Between SCG PACKAGING and ABSOLUTE CLEAN
Can any of the company-specific risk be diversified away by investing in both SCG PACKAGING and ABSOLUTE CLEAN 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 SCG PACKAGING and ABSOLUTE CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCG PACKAGING PCL NVDR and ABSOLUTE CLEAN ENERGY, you can compare the effects of market volatilities on SCG PACKAGING and ABSOLUTE CLEAN 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 SCG PACKAGING with a short position of ABSOLUTE CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG PACKAGING and ABSOLUTE CLEAN.
Diversification Opportunities for SCG PACKAGING and ABSOLUTE CLEAN
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SCG and ABSOLUTE is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SCG PACKAGING PCL NVDR and ABSOLUTE CLEAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSOLUTE CLEAN ENERGY and SCG PACKAGING 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 SCG PACKAGING PCL NVDR are associated (or correlated) with ABSOLUTE CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSOLUTE CLEAN ENERGY has no effect on the direction of SCG PACKAGING i.e., SCG PACKAGING and ABSOLUTE CLEAN go up and down completely randomly.
Pair Corralation between SCG PACKAGING and ABSOLUTE CLEAN
Assuming the 90 days trading horizon SCG PACKAGING PCL NVDR is expected to under-perform the ABSOLUTE CLEAN. In addition to that, SCG PACKAGING is 1.28 times more volatile than ABSOLUTE CLEAN ENERGY. It trades about -0.25 of its total potential returns per unit of risk. ABSOLUTE CLEAN ENERGY is currently generating about -0.21 per unit of volatility. If you would invest 188.00 in ABSOLUTE CLEAN ENERGY on August 29, 2024 and sell it today you would lose (58.00) from holding ABSOLUTE CLEAN ENERGY or give up 30.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCG PACKAGING PCL NVDR vs. ABSOLUTE CLEAN ENERGY
Performance |
| Timeline |
| SCG PACKAGING PCL |
| ABSOLUTE CLEAN ENERGY |
SCG PACKAGING and ABSOLUTE CLEAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCG PACKAGING and ABSOLUTE CLEAN
The main advantage of trading using opposite SCG PACKAGING and ABSOLUTE CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCG PACKAGING position performs unexpectedly, ABSOLUTE CLEAN 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 ABSOLUTE CLEAN will offset losses from the drop in ABSOLUTE CLEAN's long position.| SCG PACKAGING vs. Quality Houses Hotel | SCG PACKAGING vs. Quality Houses Property | SCG PACKAGING vs. CK Power Public | SCG PACKAGING vs. Thai Metal Drum |
| ABSOLUTE CLEAN vs. Absolute Clean Energy | ABSOLUTE CLEAN vs. TPI Polene Power | ABSOLUTE CLEAN vs. SCG PACKAGING PCL NVDR | ABSOLUTE CLEAN vs. CK Power 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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