Correlation Between TWZ Public and Union Petrochemical
Can any of the company-specific risk be diversified away by investing in both TWZ Public and Union Petrochemical 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 TWZ Public and Union Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TWZ Public and Union Petrochemical Public, you can compare the effects of market volatilities on TWZ Public and Union Petrochemical 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 TWZ Public with a short position of Union Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TWZ Public and Union Petrochemical.
Diversification Opportunities for TWZ Public and Union Petrochemical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between TWZ and Union is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TWZ Public and Union Petrochemical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Petrochemical and TWZ Public 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 TWZ Public are associated (or correlated) with Union Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Petrochemical has no effect on the direction of TWZ Public i.e., TWZ Public and Union Petrochemical go up and down completely randomly.
Pair Corralation between TWZ Public and Union Petrochemical
Assuming the 90 days trading horizon TWZ Public is expected to generate 10.42 times more return on investment than Union Petrochemical. However, TWZ Public is 10.42 times more volatile than Union Petrochemical Public. It trades about 0.16 of its potential returns per unit of risk. Union Petrochemical Public is currently generating about -0.23 per unit of risk. If you would invest 3.00 in TWZ Public on August 29, 2024 and sell it today you would earn a total of 1.00 from holding TWZ Public or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TWZ Public vs. Union Petrochemical Public
Performance |
| Timeline |
| TWZ Public |
| Union Petrochemical |
TWZ Public and Union Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TWZ Public and Union Petrochemical
The main advantage of trading using opposite TWZ Public and Union Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TWZ Public position performs unexpectedly, Union Petrochemical 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 Union Petrochemical will offset losses from the drop in Union Petrochemical's long position.| TWZ Public vs. AP Public | TWZ Public vs. Jasmine International Public | TWZ Public vs. Asia Plus Group | TWZ Public vs. Bangkok Aviation Fuel |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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