Correlation Between Waste Plastic and XXL ASA
Can any of the company-specific risk be diversified away by investing in both Waste Plastic and XXL ASA 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 Waste Plastic and XXL ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Plastic Upcycling and XXL ASA, you can compare the effects of market volatilities on Waste Plastic and XXL ASA 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 Waste Plastic with a short position of XXL ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Plastic and XXL ASA.
Diversification Opportunities for Waste Plastic and XXL ASA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Waste and XXL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Waste Plastic Upcycling and XXL ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL ASA and Waste Plastic 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 Waste Plastic Upcycling are associated (or correlated) with XXL ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL ASA has no effect on the direction of Waste Plastic i.e., Waste Plastic and XXL ASA go up and down completely randomly.
Pair Corralation between Waste Plastic and XXL ASA
Assuming the 90 days trading horizon Waste Plastic Upcycling is expected to generate 0.5 times more return on investment than XXL ASA. However, Waste Plastic Upcycling is 2.01 times less risky than XXL ASA. It trades about -0.1 of its potential returns per unit of risk. XXL ASA is currently generating about -0.06 per unit of risk. If you would invest 6,440 in Waste Plastic Upcycling on September 1, 2024 and sell it today you would lose (4,960) from holding Waste Plastic Upcycling or give up 77.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Plastic Upcycling vs. XXL ASA
Performance |
| Timeline |
| Waste Plastic Upcycling |
| XXL ASA |
Waste Plastic and XXL ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Plastic and XXL ASA
The main advantage of trading using opposite Waste Plastic and XXL ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Plastic position performs unexpectedly, XXL ASA 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 XXL ASA will offset losses from the drop in XXL ASA's long position.| Waste Plastic vs. Odfjell Drilling | Waste Plastic vs. Shelf Drilling | Waste Plastic vs. Eidesvik Offshore ASA | Waste Plastic vs. Norwegian Air Shuttle |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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