Correlation Between THRACE PLASTICS and ADHI KARYA

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

By analyzing existing cross correlation between THRACE PLASTICS and ADHI KARYA, you can compare the effects of market volatilities on THRACE PLASTICS and ADHI KARYA 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 THRACE PLASTICS with a short position of ADHI KARYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and ADHI KARYA.

Diversification Opportunities for THRACE PLASTICS and ADHI KARYA

0.05

Correlation Coefficient

THRACE PLASTICS  ADHI KARYA

Significant diversification

The 3 months correlation between THRACE and ADHI is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and ADHI KARYA go up and down completely randomly.

Pair Corralation between THRACE PLASTICS and ADHI KARYA

Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 10.66 times less return on investment than ADHI KARYA. But when comparing it to its historical volatility, THRACE PLASTICS is 10.8 times less risky than ADHI KARYA. It trades about 0.08 of its potential returns per unit of risk. ADHI KARYA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.85  in ADHI KARYA on December 29, 2024 and sell it today you would earn a total of  0.05  from holding ADHI KARYA or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

THRACE PLASTICS  vs.  ADHI KARYA

THRACE PLASTICS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, THRACE PLASTICS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ADHI KARYA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADHI KARYA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ADHI KARYA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THRACE PLASTICS and ADHI KARYA

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

The idea behind THRACE PLASTICS and ADHI KARYA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.