Correlation Between Riverway Management and An Phat

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

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

Diversification Opportunities for Riverway Management and An Phat

0.56

Correlation Coefficient

Riverway Management  An Phat

Very weak diversification

The 3 months correlation between Riverway and AAA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Riverway Management JSC and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and Riverway Management 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 Riverway Management JSC are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of Riverway Management i.e., Riverway Management and An Phat go up and down completely randomly.

Pair Corralation between Riverway Management and An Phat

Assuming the 90 days trading horizon Riverway Management JSC is expected to generate 2.62 times more return on investment than An Phat. However, Riverway Management is 2.62 times more volatile than An Phat Plastic. It trades about 0.11 of its potential returns per unit of risk. An Phat Plastic is currently generating about -0.07 per unit of risk. If you would invest  510,000  in Riverway Management JSC on October 9, 2024 and sell it today you would earn a total of  20,000  from holding Riverway Management JSC or generate 3.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.0%
Values	Daily Returns

Riverway Management JSC  vs.  An Phat Plastic

Riverway Management JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riverway Management JSC 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.

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.

Pair Trading with Riverway Management and An Phat

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

The idea behind Riverway Management JSC and An Phat Plastic 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.