Correlation Between Goodyear Tire and Polyplex (Thailand)

Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Polyplex (Thailand) 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 Goodyear Tire and Polyplex (Thailand) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Goodyear Tire and Polyplex Public, you can compare the effects of market volatilities on Goodyear Tire and Polyplex (Thailand) 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 Goodyear Tire with a short position of Polyplex (Thailand). Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Polyplex (Thailand).

Diversification Opportunities for Goodyear Tire and Polyplex (Thailand)

0.01

Correlation Coefficient

Goodyear Tire  Polyplex (Thailand)

Significant diversification

The 3 months correlation between Goodyear and Polyplex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Goodyear Tire and Polyplex Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polyplex (Thailand) and Goodyear Tire 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 The Goodyear Tire are associated (or correlated) with Polyplex (Thailand). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polyplex (Thailand) has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Polyplex (Thailand) go up and down completely randomly.

Pair Corralation between Goodyear Tire and Polyplex (Thailand)

Assuming the 90 days horizon The Goodyear Tire is expected to generate 1.75 times more return on investment than Polyplex (Thailand). However, Goodyear Tire is 1.75 times more volatile than Polyplex Public. It trades about 0.03 of its potential returns per unit of risk. Polyplex Public is currently generating about -0.07 per unit of risk. If you would invest  838.00  in The Goodyear Tire on December 28, 2024 and sell it today you would earn a total of  30.00  from holding The Goodyear Tire or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

The Goodyear Tire  vs.  Polyplex Public

Goodyear Tire

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Goodyear Tire are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Goodyear Tire may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Polyplex (Thailand)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polyplex Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Goodyear Tire and Polyplex (Thailand)

The main advantage of trading using opposite Goodyear Tire and Polyplex (Thailand) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Polyplex (Thailand) 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 Polyplex (Thailand) will offset losses from the drop in Polyplex (Thailand)'s long position.

The idea behind The Goodyear Tire and Polyplex Public 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..