Correlation Between An Phat and Everland Investment

Can any of the company-specific risk be diversified away by investing in both An Phat and Everland Investment 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 An Phat and Everland Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between An Phat Plastic and Everland Investment JSC, you can compare the effects of market volatilities on An Phat and Everland Investment 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 An Phat with a short position of Everland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of An Phat and Everland Investment.

Diversification Opportunities for An Phat and Everland Investment

0.76

Correlation Coefficient

An Phat  Everland Investment

Poor diversification

The 3 months correlation between AAA and Everland is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding An Phat Plastic and Everland Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everland Investment JSC and An Phat 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 An Phat Plastic are associated (or correlated) with Everland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everland Investment JSC has no effect on the direction of An Phat i.e., An Phat and Everland Investment go up and down completely randomly.

Pair Corralation between An Phat and Everland Investment

Assuming the 90 days trading horizon An Phat is expected to generate 4.57 times less return on investment than Everland Investment. But when comparing it to its historical volatility, An Phat Plastic is 1.83 times less risky than Everland Investment. It trades about 0.02 of its potential returns per unit of risk. Everland Investment JSC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  584,000  in Everland Investment JSC on October 22, 2024 and sell it today you would earn a total of  21,000  from holding Everland Investment JSC or generate 3.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

An Phat Plastic  vs.  Everland Investment JSC

An Phat Plastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days An Phat Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Everland Investment JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everland Investment JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with An Phat and Everland Investment

The main advantage of trading using opposite An Phat and Everland Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if An Phat position performs unexpectedly, Everland Investment 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 Everland Investment will offset losses from the drop in Everland Investment's long position.

The idea behind An Phat Plastic and Everland Investment JSC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.