Correlation Between Pha Le and Global Electrical

Can any of the company-specific risk be diversified away by investing in both Pha Le and Global Electrical 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 Pha Le and Global Electrical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pha Le Plastics and Global Electrical Technology, you can compare the effects of market volatilities on Pha Le and Global Electrical 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 Pha Le with a short position of Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Global Electrical.

Diversification Opportunities for Pha Le and Global Electrical

0.46

Correlation Coefficient

Pha Le  Global Electrical

Very weak diversification

The 3 months correlation between Pha and Global is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical and Pha Le 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 Pha Le Plastics are associated (or correlated) with Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Pha Le i.e., Pha Le and Global Electrical go up and down completely randomly.

Pair Corralation between Pha Le and Global Electrical

Assuming the 90 days trading horizon Pha Le is expected to generate 3.86 times less return on investment than Global Electrical. But when comparing it to its historical volatility, Pha Le Plastics is 2.87 times less risky than Global Electrical. It trades about 0.05 of its potential returns per unit of risk. Global Electrical Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,888,095  in Global Electrical Technology on October 5, 2024 and sell it today you would earn a total of  691,905  from holding Global Electrical Technology or generate 36.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.53%
Values	Daily Returns

Pha Le Plastics  vs.  Global Electrical Technology

Pha Le Plastics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pha Le Plastics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Pha Le is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global Electrical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Electrical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pha Le and Global Electrical

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

The idea behind Pha Le Plastics and Global Electrical Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.