Correlation Between CP ALL and Rojana Industrial

Can any of the company-specific risk be diversified away by investing in both CP ALL and Rojana Industrial 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 CP ALL and Rojana Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CP ALL Public and Rojana Industrial Park, you can compare the effects of market volatilities on CP ALL and Rojana Industrial 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 CP ALL with a short position of Rojana Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Rojana Industrial.

Diversification Opportunities for CP ALL and Rojana Industrial

0.59

Correlation Coefficient

CP ALL  Rojana Industrial

Very weak diversification

The 3 months correlation between CPALL and Rojana is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Rojana Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rojana Industrial Park and CP ALL 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 CP ALL Public are associated (or correlated) with Rojana Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rojana Industrial Park has no effect on the direction of CP ALL i.e., CP ALL and Rojana Industrial go up and down completely randomly.

Pair Corralation between CP ALL and Rojana Industrial

Assuming the 90 days trading horizon CP ALL is expected to generate 3.14 times less return on investment than Rojana Industrial. But when comparing it to its historical volatility, CP ALL Public is 1.84 times less risky than Rojana Industrial. It trades about 0.04 of its potential returns per unit of risk. Rojana Industrial Park is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  595.00  in Rojana Industrial Park on September 4, 2024 and sell it today you would earn a total of  55.00  from holding Rojana Industrial Park or generate 9.24% return on investment over 90 days.

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

CP ALL Public  vs.  Rojana Industrial Park

CP ALL Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CP ALL Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, CP ALL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Rojana Industrial Park

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rojana Industrial Park are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Rojana Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CP ALL and Rojana Industrial

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

The idea behind CP ALL Public and Rojana Industrial Park 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.