Correlation Between Sermsang Power and Prime Road
Can any of the company-specific risk be diversified away by investing in both Sermsang Power and Prime Road 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 Sermsang Power and Prime Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sermsang Power and Prime Road Power, you can compare the effects of market volatilities on Sermsang Power and Prime Road 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 Sermsang Power with a short position of Prime Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sermsang Power and Prime Road.
Diversification Opportunities for Sermsang Power and Prime Road
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sermsang and Prime is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sermsang Power and Prime Road Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Road Power and Sermsang Power 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 Sermsang Power are associated (or correlated) with Prime Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Road Power has no effect on the direction of Sermsang Power i.e., Sermsang Power and Prime Road go up and down completely randomly.
Pair Corralation between Sermsang Power and Prime Road
Assuming the 90 days trading horizon Sermsang Power is expected to generate 0.12 times more return on investment than Prime Road. However, Sermsang Power is 8.1 times less risky than Prime Road. It trades about -0.18 of its potential returns per unit of risk. Prime Road Power is currently generating about -0.12 per unit of risk. If you would invest 540.00 in Sermsang Power on November 2, 2024 and sell it today you would lose (25.00) from holding Sermsang Power or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sermsang Power vs. Prime Road Power
Performance |
| Timeline |
| Sermsang Power |
| Prime Road Power |
Sermsang Power and Prime Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sermsang Power and Prime Road
The main advantage of trading using opposite Sermsang Power and Prime Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sermsang Power position performs unexpectedly, Prime Road 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 Prime Road will offset losses from the drop in Prime Road's long position.| Sermsang Power vs. Gunkul Engineering Public | Sermsang Power vs. Energy Absolute Public | Sermsang Power vs. BCPG Public | Sermsang Power vs. Gulf Energy Development |
| Prime Road vs. BCPG Public | Prime Road vs. CK Power Public | Prime Road vs. TPI Polene Power | Prime Road vs. Earth Tech Environment |
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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