Correlation Between Sri Trang and North East
Can any of the company-specific risk be diversified away by investing in both Sri Trang and North East 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 Sri Trang and North East into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sri Trang Gloves and North East Rubbers, you can compare the effects of market volatilities on Sri Trang and North East 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 Sri Trang with a short position of North East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Trang and North East.
Diversification Opportunities for Sri Trang and North East
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sri and North is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sri Trang Gloves and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers and Sri Trang 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 Sri Trang Gloves are associated (or correlated) with North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of Sri Trang i.e., Sri Trang and North East go up and down completely randomly.
Pair Corralation between Sri Trang and North East
Assuming the 90 days trading horizon Sri Trang Gloves is expected to generate 2.92 times more return on investment than North East. However, Sri Trang is 2.92 times more volatile than North East Rubbers. It trades about -0.05 of its potential returns per unit of risk. North East Rubbers is currently generating about -0.16 per unit of risk. If you would invest 1,060 in Sri Trang Gloves on August 29, 2024 and sell it today you would lose (40.00) from holding Sri Trang Gloves or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sri Trang Gloves vs. North East Rubbers
Performance |
| Timeline |
| Sri Trang Gloves |
| North East Rubbers |
Sri Trang and North East Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Trang and North East
The main advantage of trading using opposite Sri Trang and North East positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Trang position performs unexpectedly, North East 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 North East will offset losses from the drop in North East's long position.| Sri Trang vs. NCL International Logistics | Sri Trang vs. The Erawan Group | Sri Trang vs. Airports of Thailand | Sri Trang vs. Eastern Technical Engineering |
| North East vs. NCL International Logistics | North East vs. The Erawan Group | North East vs. Airports of Thailand | North East vs. Eastern Technical Engineering |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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