Correlation Between Corporate Office and NEW PACIFIC
Can any of the company-specific risk be diversified away by investing in both Corporate Office and NEW PACIFIC 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 Corporate Office and NEW PACIFIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and NEW PACIFIC METALS, you can compare the effects of market volatilities on Corporate Office and NEW PACIFIC 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 Corporate Office with a short position of NEW PACIFIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and NEW PACIFIC.
Diversification Opportunities for Corporate Office and NEW PACIFIC
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Corporate and NEW is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and NEW PACIFIC METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW PACIFIC METALS and Corporate Office 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 Corporate Office Properties are associated (or correlated) with NEW PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW PACIFIC METALS has no effect on the direction of Corporate Office i.e., Corporate Office and NEW PACIFIC go up and down completely randomly.
Pair Corralation between Corporate Office and NEW PACIFIC
Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the NEW PACIFIC. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Office Properties is 6.08 times less risky than NEW PACIFIC. The stock trades about -0.13 of its potential returns per unit of risk. The NEW PACIFIC METALS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 110.00 in NEW PACIFIC METALS on October 25, 2024 and sell it today you would lose (1.00) from holding NEW PACIFIC METALS or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. NEW PACIFIC METALS
Performance |
| Timeline |
| Corporate Office Pro |
| NEW PACIFIC METALS |
Corporate Office and NEW PACIFIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and NEW PACIFIC
The main advantage of trading using opposite Corporate Office and NEW PACIFIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, NEW PACIFIC 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 NEW PACIFIC will offset losses from the drop in NEW PACIFIC's long position.| Corporate Office vs. Thai Beverage Public | Corporate Office vs. Perseus Mining Limited | Corporate Office vs. NAKED WINES PLC | Corporate Office vs. Forsys Metals Corp |
| NEW PACIFIC vs. Chengdu PUTIAN Telecommunications | NEW PACIFIC vs. Corporate Office Properties | NEW PACIFIC vs. CENTURIA OFFICE REIT | NEW PACIFIC vs. TELECOM ITALIA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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