Correlation Between Southern Petrochemicals and Elin Electronics
Can any of the company-specific risk be diversified away by investing in both Southern Petrochemicals and Elin Electronics 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 Southern Petrochemicals and Elin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Petrochemicals Industries and Elin Electronics Limited, you can compare the effects of market volatilities on Southern Petrochemicals and Elin Electronics 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 Southern Petrochemicals with a short position of Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Petrochemicals and Elin Electronics.
Diversification Opportunities for Southern Petrochemicals and Elin Electronics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Elin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Southern Petrochemicals Indust and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics and Southern Petrochemicals 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 Southern Petrochemicals Industries are associated (or correlated) with Elin Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elin Electronics has no effect on the direction of Southern Petrochemicals i.e., Southern Petrochemicals and Elin Electronics go up and down completely randomly.
Pair Corralation between Southern Petrochemicals and Elin Electronics
Assuming the 90 days trading horizon Southern Petrochemicals Industries is expected to generate 0.75 times more return on investment than Elin Electronics. However, Southern Petrochemicals Industries is 1.33 times less risky than Elin Electronics. It trades about 0.04 of its potential returns per unit of risk. Elin Electronics Limited is currently generating about -0.27 per unit of risk. If you would invest 7,563 in Southern Petrochemicals Industries on November 3, 2024 and sell it today you would earn a total of 114.00 from holding Southern Petrochemicals Industries or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Petrochemicals Indust vs. Elin Electronics Limited
Performance |
| Timeline |
| Southern Petrochemicals |
| Elin Electronics |
Southern Petrochemicals and Elin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Petrochemicals and Elin Electronics
The main advantage of trading using opposite Southern Petrochemicals and Elin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Petrochemicals position performs unexpectedly, Elin Electronics 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 Elin Electronics will offset losses from the drop in Elin Electronics' long position.| Southern Petrochemicals vs. MIC Electronics Limited | Southern Petrochemicals vs. LT Foods Limited | Southern Petrochemicals vs. WESTLIFE FOODWORLD LIMITED | Southern Petrochemicals vs. Tree House Education |
| Elin Electronics vs. Embassy Office Parks | Elin Electronics vs. Apollo Sindoori Hotels | Elin Electronics vs. Music Broadcast Limited | Elin Electronics vs. Transport of |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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