Correlation Between SCG PACKAGING and Earth Tech
Can any of the company-specific risk be diversified away by investing in both SCG PACKAGING and Earth Tech 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 Earth Tech 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 Earth Tech Environment, you can compare the effects of market volatilities on SCG PACKAGING and Earth Tech 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 Earth Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG PACKAGING and Earth Tech.
Diversification Opportunities for SCG PACKAGING and Earth Tech
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between SCG and Earth is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SCG PACKAGING PCL NVDR and Earth Tech Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earth Tech Environment 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 Earth Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earth Tech Environment has no effect on the direction of SCG PACKAGING i.e., SCG PACKAGING and Earth Tech go up and down completely randomly.
Pair Corralation between SCG PACKAGING and Earth Tech
Assuming the 90 days trading horizon SCG PACKAGING PCL NVDR is expected to under-perform the Earth Tech. In addition to that, SCG PACKAGING is 2.71 times more volatile than Earth Tech Environment. It trades about -0.26 of its total potential returns per unit of risk. Earth Tech Environment is currently generating about -0.01 per unit of volatility. If you would invest 202.00 in Earth Tech Environment on September 1, 2024 and sell it today you would lose (4.00) from holding Earth Tech Environment or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCG PACKAGING PCL NVDR vs. Earth Tech Environment
Performance |
| Timeline |
| SCG PACKAGING PCL |
| Earth Tech Environment |
SCG PACKAGING and Earth Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCG PACKAGING and Earth Tech
The main advantage of trading using opposite SCG PACKAGING and Earth Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCG PACKAGING position performs unexpectedly, Earth Tech 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 Earth Tech will offset losses from the drop in Earth Tech's long position.| SCG PACKAGING vs. PTT Public | SCG PACKAGING vs. Kasikornbank Public | SCG PACKAGING vs. The Siam Cement | SCG PACKAGING vs. OSOTSPA PCL NVDR |
| Earth Tech vs. Asia Biomass Public | Earth Tech vs. JCK Hospitality Public | Earth Tech vs. JCK International Public | Earth Tech vs. Green Resources 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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