Correlation Between Warner Music and Banpu PCL
Can any of the company-specific risk be diversified away by investing in both Warner Music and Banpu PCL 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 Warner Music and Banpu PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and Banpu PCL, you can compare the effects of market volatilities on Warner Music and Banpu PCL 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 Warner Music with a short position of Banpu PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Banpu PCL.
Diversification Opportunities for Warner Music and Banpu PCL
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Warner and Banpu is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Banpu PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banpu PCL and Warner Music 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 Warner Music Group are associated (or correlated) with Banpu PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banpu PCL has no effect on the direction of Warner Music i.e., Warner Music and Banpu PCL go up and down completely randomly.
Pair Corralation between Warner Music and Banpu PCL
Assuming the 90 days horizon Warner Music Group is expected to generate 0.3 times more return on investment than Banpu PCL. However, Warner Music Group is 3.35 times less risky than Banpu PCL. It trades about 0.13 of its potential returns per unit of risk. Banpu PCL is currently generating about 0.0 per unit of risk. If you would invest 2,909 in Warner Music Group on September 5, 2024 and sell it today you would earn a total of 167.00 from holding Warner Music Group or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Warner Music Group vs. Banpu PCL
Performance |
| Timeline |
| Warner Music Group |
| Banpu PCL |
Warner Music and Banpu PCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Banpu PCL
The main advantage of trading using opposite Warner Music and Banpu PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Banpu PCL 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 Banpu PCL will offset losses from the drop in Banpu PCL's long position.| Warner Music vs. AUST AGRICULTURAL | Warner Music vs. North American Construction | Warner Music vs. Granite Construction | Warner Music vs. Automatic Data Processing |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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