Correlation Between Zeon and Polyplex (Thailand)

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

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

Diversification Opportunities for Zeon and Polyplex (Thailand)

0.65

Correlation Coefficient

Zeon  Polyplex (Thailand)

Poor diversification

The 3 months correlation between Zeon and Polyplex is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zeon Corp. and Polyplex Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polyplex (Thailand) and Zeon 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 Zeon Corporation 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 Zeon i.e., Zeon and Polyplex (Thailand) go up and down completely randomly.

Pair Corralation between Zeon and Polyplex (Thailand)

Assuming the 90 days horizon Zeon is expected to generate 12.29 times less return on investment than Polyplex (Thailand). But when comparing it to its historical volatility, Zeon Corporation is 10.95 times less risky than Polyplex (Thailand). It trades about 0.13 of its potential returns per unit of risk. Polyplex Public is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Polyplex Public on September 23, 2024 and sell it today you would earn a total of  17.00  from holding Polyplex Public or generate 121.43% return on investment over 90 days.

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

Zeon Corp.  vs.  Polyplex Public

Zeon

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zeon Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zeon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Polyplex (Thailand)

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polyplex Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Polyplex (Thailand) reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zeon and Polyplex (Thailand)

The main advantage of trading using opposite Zeon and Polyplex (Thailand) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zeon 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 Zeon Corporation 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.

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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .