Correlation Between Transport and An Phat

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

By analyzing existing cross correlation between Transport and Industry and An Phat Plastic, you can compare the effects of market volatilities on Transport and An Phat 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 Transport with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport and An Phat.

Diversification Opportunities for Transport and An Phat

0.26

Correlation Coefficient

Transport  An Phat

Modest diversification

The 3 months correlation between Transport and AAA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Transport and Industry and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and Transport 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 Transport and Industry are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of Transport i.e., Transport and An Phat go up and down completely randomly.

Pair Corralation between Transport and An Phat

Assuming the 90 days trading horizon Transport and Industry is expected to under-perform the An Phat. In addition to that, Transport is 2.25 times more volatile than An Phat Plastic. It trades about -0.36 of its total potential returns per unit of risk. An Phat Plastic is currently generating about -0.04 per unit of volatility. If you would invest  872,000  in An Phat Plastic on December 29, 2024 and sell it today you would lose (29,000) from holding An Phat Plastic or give up 3.33% of portfolio value over 90 days.

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

Transport and Industry  vs.  An Phat Plastic

Transport and Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transport and Industry 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

An Phat Plastic

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Transport and An Phat

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

The idea behind Transport and Industry and An Phat Plastic 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.