Correlation Between Eureka Design and Asia Fiber
Can any of the company-specific risk be diversified away by investing in both Eureka Design and Asia Fiber 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 Eureka Design and Asia Fiber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eureka Design Public and Asia Fiber Public, you can compare the effects of market volatilities on Eureka Design and Asia Fiber 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 Eureka Design with a short position of Asia Fiber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eureka Design and Asia Fiber.
Diversification Opportunities for Eureka Design and Asia Fiber
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eureka and Asia is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eureka Design Public and Asia Fiber Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Fiber Public and Eureka Design 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 Eureka Design Public are associated (or correlated) with Asia Fiber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Fiber Public has no effect on the direction of Eureka Design i.e., Eureka Design and Asia Fiber go up and down completely randomly.
Pair Corralation between Eureka Design and Asia Fiber
Assuming the 90 days trading horizon Eureka Design Public is expected to under-perform the Asia Fiber. But the stock apears to be less risky and, when comparing its historical volatility, Eureka Design Public is 13.23 times less risky than Asia Fiber. The stock trades about 0.0 of its potential returns per unit of risk. The Asia Fiber Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 870.00 in Asia Fiber Public on November 2, 2024 and sell it today you would lose (468.00) from holding Asia Fiber Public or give up 53.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eureka Design Public vs. Asia Fiber Public
Performance |
| Timeline |
| Eureka Design Public |
| Asia Fiber Public |
Eureka Design and Asia Fiber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eureka Design and Asia Fiber
The main advantage of trading using opposite Eureka Design and Asia Fiber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eureka Design position performs unexpectedly, Asia Fiber 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 Asia Fiber will offset losses from the drop in Asia Fiber's long position.| Eureka Design vs. Union Petrochemical Public | Eureka Design vs. TV Thunder Public | Eureka Design vs. Exotic Food Public | Eureka Design vs. TWZ Public |
| Asia Fiber vs. AJ Plast Public | Asia Fiber vs. Aikchol Hospital Public | Asia Fiber vs. Boutique Newcity Public | Asia Fiber vs. Allianz Ayudhya Capital |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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