Correlation Between Century Synthetic and POT

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Can any of the company-specific risk be diversified away by investing in both Century Synthetic and POT 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 Century Synthetic and POT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Synthetic Fiber and PostTelecommunication Equipment, you can compare the effects of market volatilities on Century Synthetic and POT 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 Century Synthetic with a short position of POT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Synthetic and POT.

Diversification Opportunities for Century Synthetic and POT

CenturyPOTDiversified AwayCenturyPOTDiversified Away100%
0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Century and POT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Century Synthetic Fiber and PostTelecommunication Equipmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostTelecommunication and Century Synthetic 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 Century Synthetic Fiber are associated (or correlated) with POT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostTelecommunication has no effect on the direction of Century Synthetic i.e., Century Synthetic and POT go up and down completely randomly.

Pair Corralation between Century Synthetic and POT

Assuming the 90 days trading horizon Century Synthetic is expected to generate 1.52 times less return on investment than POT. But when comparing it to its historical volatility, Century Synthetic Fiber is 2.15 times less risky than POT. It trades about 0.42 of its potential returns per unit of risk. PostTelecommunication Equipment is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,570,000  in PostTelecommunication Equipment on November 20, 2024 and sell it today you would earn a total of  380,000  from holding PostTelecommunication Equipment or generate 24.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy94.12%
ValuesDaily Returns

Century Synthetic Fiber  vs.  PostTelecommunication Equipmen

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-5
JavaScript chart by amCharts 3.21.15STK POT
       Timeline  
Century Synthetic Fiber 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Century Synthetic Fiber are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Century Synthetic may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb22,00023,00024,00025,00026,00027,000
PostTelecommunication 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PostTelecommunication Equipment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, POT displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanFebDecJanFeb14,00015,00016,00017,00018,00019,000

Century Synthetic and POT Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.77-3.57-2.38-1.180.021.272.533.85.06 0.050.100.15
JavaScript chart by amCharts 3.21.15STK POT
       Returns  

Pair Trading with Century Synthetic and POT

The main advantage of trading using opposite Century Synthetic and POT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Synthetic position performs unexpectedly, POT 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 POT will offset losses from the drop in POT's long position.
The idea behind Century Synthetic Fiber and PostTelecommunication Equipment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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