Correlation Between THORNEY TECHS and REGAL ASIAN
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and REGAL ASIAN 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 THORNEY TECHS and REGAL ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on THORNEY TECHS and REGAL ASIAN 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 THORNEY TECHS with a short position of REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and REGAL ASIAN.
Diversification Opportunities for THORNEY TECHS and REGAL ASIAN
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between THORNEY and REGAL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and REGAL ASIAN go up and down completely randomly.
Pair Corralation between THORNEY TECHS and REGAL ASIAN
Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 3.28 times more return on investment than REGAL ASIAN. However, THORNEY TECHS is 3.28 times more volatile than REGAL ASIAN INVESTMENTS. It trades about 0.02 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about 0.03 per unit of risk. If you would invest 8.45 in THORNEY TECHS LTD on September 1, 2024 and sell it today you would lose (1.30) from holding THORNEY TECHS LTD or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. REGAL ASIAN INVESTMENTS
Performance |
| Timeline |
| THORNEY TECHS LTD |
| REGAL ASIAN INVESTMENTS |
THORNEY TECHS and REGAL ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and REGAL ASIAN
The main advantage of trading using opposite THORNEY TECHS and REGAL ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS position performs unexpectedly, REGAL ASIAN 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 REGAL ASIAN will offset losses from the drop in REGAL ASIAN's long position.| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
| REGAL ASIAN vs. PennantPark Investment | REGAL ASIAN vs. SEI INVESTMENTS | REGAL ASIAN vs. MARKET VECTR RETAIL | REGAL ASIAN vs. Strategic Investments AS |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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