Correlation Between Book and Pha Le

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

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

Diversification Opportunities for Book and Pha Le

0.16

Correlation Coefficient

Book  Pha Le

Average diversification

The 3 months correlation between Book and Pha is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Book And Educational and Pha Le Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Le Plastics and Book 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 Book And Educational are associated (or correlated) with Pha Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Le Plastics has no effect on the direction of Book i.e., Book and Pha Le go up and down completely randomly.

Pair Corralation between Book and Pha Le

Assuming the 90 days trading horizon Book And Educational is expected to generate 2.4 times more return on investment than Pha Le. However, Book is 2.4 times more volatile than Pha Le Plastics. It trades about 0.02 of its potential returns per unit of risk. Pha Le Plastics is currently generating about -0.07 per unit of risk. If you would invest  1,710,000  in Book And Educational on September 25, 2024 and sell it today you would lose (10,000) from holding Book And Educational or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.56%
Values	Daily Returns

Book And Educational  vs.  Pha Le Plastics

Book And Educational

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Book And Educational has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Book is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pha Le Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pha Le Plastics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Book and Pha Le

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

The idea behind Book And Educational and Pha Le Plastics 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.