Correlation Between Union Pioneer and Union Plastic
Can any of the company-specific risk be diversified away by investing in both Union Pioneer and Union Plastic 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 Union Pioneer and Union Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Pioneer Public and Union Plastic Public, you can compare the effects of market volatilities on Union Pioneer and Union Plastic 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 Union Pioneer with a short position of Union Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Pioneer and Union Plastic.
Diversification Opportunities for Union Pioneer and Union Plastic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Union is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Union Pioneer Public and Union Plastic Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Plastic Public and Union Pioneer 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 Union Pioneer Public are associated (or correlated) with Union Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Plastic Public has no effect on the direction of Union Pioneer i.e., Union Pioneer and Union Plastic go up and down completely randomly.
Pair Corralation between Union Pioneer and Union Plastic
Assuming the 90 days trading horizon Union Pioneer is expected to generate 2.38 times less return on investment than Union Plastic. But when comparing it to its historical volatility, Union Pioneer Public is 1.54 times less risky than Union Plastic. It trades about 0.01 of its potential returns per unit of risk. Union Plastic Public is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,700 in Union Plastic Public on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Union Plastic Public or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Pioneer Public vs. Union Plastic Public
Performance |
| Timeline |
| Union Pioneer Public |
| Union Plastic Public |
Union Pioneer and Union Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Pioneer and Union Plastic
The main advantage of trading using opposite Union Pioneer and Union Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Pioneer position performs unexpectedly, Union Plastic 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 Plastic will offset losses from the drop in Union Plastic's long position.| Union Pioneer vs. Union Plastic Public | Union Pioneer vs. Thanulux Public | Union Pioneer vs. Univanich Palm Oil | Union Pioneer vs. Thai Poly Acrylic |
| Union Plastic vs. PTT Public | Union Plastic vs. PTT Exploration and | Union Plastic vs. CP ALL Public | Union Plastic vs. Kasikornbank Public |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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