Correlation Between SCG Packaging and AJ Plast
Can any of the company-specific risk be diversified away by investing in both SCG Packaging and AJ Plast 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 AJ Plast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCG Packaging Public and AJ Plast Public, you can compare the effects of market volatilities on SCG Packaging and AJ Plast 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 AJ Plast. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG Packaging and AJ Plast.
Diversification Opportunities for SCG Packaging and AJ Plast
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SCG and AJ Plast is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SCG Packaging Public and AJ Plast Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Plast Public 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 Public are associated (or correlated) with AJ Plast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Plast Public has no effect on the direction of SCG Packaging i.e., SCG Packaging and AJ Plast go up and down completely randomly.
Pair Corralation between SCG Packaging and AJ Plast
Assuming the 90 days trading horizon SCG Packaging Public is expected to under-perform the AJ Plast. In addition to that, SCG Packaging is 1.98 times more volatile than AJ Plast Public. It trades about -0.17 of its total potential returns per unit of risk. AJ Plast Public is currently generating about -0.26 per unit of volatility. If you would invest 565.00 in AJ Plast Public on September 12, 2024 and sell it today you would lose (113.00) from holding AJ Plast Public or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCG Packaging Public vs. AJ Plast Public
Performance |
| Timeline |
| SCG Packaging Public |
| AJ Plast Public |
SCG Packaging and AJ Plast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCG Packaging and AJ Plast
The main advantage of trading using opposite SCG Packaging and AJ Plast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCG Packaging position performs unexpectedly, AJ Plast 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 AJ Plast will offset losses from the drop in AJ Plast's long position.| SCG Packaging vs. Lease IT Public | SCG Packaging vs. MCS Steel Public | SCG Packaging vs. Kingsmen CMTI Public | SCG Packaging vs. Moong Pattana International |
| AJ Plast vs. Thantawan Industry Public | AJ Plast vs. The Erawan Group | AJ Plast vs. Jay Mart Public | AJ Plast vs. Airports of Thailand |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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