Correlation Between EX PACK and Sanasa Development

Can any of the company-specific risk be diversified away by investing in both EX PACK and Sanasa Development 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 EX PACK and Sanasa Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EX PACK RUGATED CARTONS and Sanasa Development Bank, you can compare the effects of market volatilities on EX PACK and Sanasa Development 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 EX PACK with a short position of Sanasa Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of EX PACK and Sanasa Development.

Diversification Opportunities for EX PACK and Sanasa Development

0.74

Correlation Coefficient

EX PACK  Sanasa Development

Poor diversification

The 3 months correlation between PACKN0000 and Sanasa is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding EX PACK RUGATED CARTONS and Sanasa Development Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanasa Development Bank and EX PACK 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 EX PACK RUGATED CARTONS are associated (or correlated) with Sanasa Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanasa Development Bank has no effect on the direction of EX PACK i.e., EX PACK and Sanasa Development go up and down completely randomly.

Pair Corralation between EX PACK and Sanasa Development

Assuming the 90 days trading horizon EX PACK is expected to generate 6.77 times less return on investment than Sanasa Development. But when comparing it to its historical volatility, EX PACK RUGATED CARTONS is 2.06 times less risky than Sanasa Development. It trades about 0.1 of its potential returns per unit of risk. Sanasa Development Bank is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3,310  in Sanasa Development Bank on October 10, 2024 and sell it today you would earn a total of  1,060  from holding Sanasa Development Bank or generate 32.02% return on investment over 90 days.

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

EX PACK RUGATED CARTONS  vs.  Sanasa Development Bank

EX PACK RUGATED

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EX PACK RUGATED CARTONS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EX PACK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sanasa Development Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanasa Development Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanasa Development sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EX PACK and Sanasa Development

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

The idea behind EX PACK RUGATED CARTONS and Sanasa Development Bank 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.