Correlation Between Sea Oil and Smart Concrete
Can any of the company-specific risk be diversified away by investing in both Sea Oil and Smart Concrete 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 Sea Oil and Smart Concrete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Oil Public and Smart Concrete Public, you can compare the effects of market volatilities on Sea Oil and Smart Concrete 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 Sea Oil with a short position of Smart Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Oil and Smart Concrete.
Diversification Opportunities for Sea Oil and Smart Concrete
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sea and Smart is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sea Oil Public and Smart Concrete Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Concrete Public and Sea Oil 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 Sea Oil Public are associated (or correlated) with Smart Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Concrete Public has no effect on the direction of Sea Oil i.e., Sea Oil and Smart Concrete go up and down completely randomly.
Pair Corralation between Sea Oil and Smart Concrete
Assuming the 90 days trading horizon Sea Oil is expected to generate 184.44 times less return on investment than Smart Concrete. But when comparing it to its historical volatility, Sea Oil Public is 39.56 times less risky than Smart Concrete. It trades about 0.01 of its potential returns per unit of risk. Smart Concrete Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Smart Concrete Public on September 4, 2024 and sell it today you would lose (17.00) from holding Smart Concrete Public or give up 18.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea Oil Public vs. Smart Concrete Public
Performance |
| Timeline |
| Sea Oil Public |
| Smart Concrete Public |
Sea Oil and Smart Concrete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea Oil and Smart Concrete
The main advantage of trading using opposite Sea Oil and Smart Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea Oil position performs unexpectedly, Smart Concrete 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 Smart Concrete will offset losses from the drop in Smart Concrete's long position.| Sea Oil vs. PTT Oil and | Sea Oil vs. Thai Oil Public | Sea Oil vs. IRPC Public | Sea Oil vs. Star Petroleum Refining |
| Smart Concrete vs. Salee Industry Public | Smart Concrete vs. Sea Oil Public | Smart Concrete vs. Rayong Wire Industries | Smart Concrete vs. Project Planning Service |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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