Correlation Between Pha Le and Din Capital

Can any of the company-specific risk be diversified away by investing in both Pha Le and Din Capital 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 Din Capital 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 Din Capital Investment, you can compare the effects of market volatilities on Pha Le and Din Capital 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 Din Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Din Capital.

Diversification Opportunities for Pha Le and Din Capital

0.22

Correlation Coefficient

Pha Le  Din Capital

Modest diversification

The 3 months correlation between Pha and Din is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Din Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Din Capital Investment 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 Din Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Din Capital Investment has no effect on the direction of Pha Le i.e., Pha Le and Din Capital go up and down completely randomly.

Pair Corralation between Pha Le and Din Capital

Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 2.35 times more return on investment than Din Capital. However, Pha Le is 2.35 times more volatile than Din Capital Investment. It trades about 0.11 of its potential returns per unit of risk. Din Capital Investment is currently generating about 0.11 per unit of risk. If you would invest  452,000  in Pha Le Plastics on October 26, 2024 and sell it today you would earn a total of  45,000  from holding Pha Le Plastics or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.35%
Values	Daily Returns

Pha Le Plastics  vs.  Din Capital Investment

Pha Le Plastics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pha Le Plastics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pha Le may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Din Capital Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Din Capital Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Din Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pha Le and Din Capital

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

The idea behind Pha Le Plastics and Din Capital Investment 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.