Correlation Between Golden Bridge and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Golden Bridge and Hanshin Construction 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 Golden Bridge and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Bridge Investment and Hanshin Construction Co, you can compare the effects of market volatilities on Golden Bridge and Hanshin Construction 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 Golden Bridge with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Bridge and Hanshin Construction.
Diversification Opportunities for Golden Bridge and Hanshin Construction
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Golden and Hanshin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Golden Bridge Investment and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and Golden Bridge 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 Golden Bridge Investment are associated (or correlated) with Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of Golden Bridge i.e., Golden Bridge and Hanshin Construction go up and down completely randomly.
Pair Corralation between Golden Bridge and Hanshin Construction
Assuming the 90 days trading horizon Golden Bridge Investment is expected to generate 0.66 times more return on investment than Hanshin Construction. However, Golden Bridge Investment is 1.5 times less risky than Hanshin Construction. It trades about 0.17 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.03 per unit of risk. If you would invest 41,800 in Golden Bridge Investment on October 12, 2024 and sell it today you would earn a total of 1,300 from holding Golden Bridge Investment or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Bridge Investment vs. Hanshin Construction Co
Performance |
| Timeline |
| Golden Bridge Investment |
| Hanshin Construction |
Golden Bridge and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Bridge and Hanshin Construction
The main advantage of trading using opposite Golden Bridge and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Bridge position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| Golden Bridge vs. CG Hi Tech | Golden Bridge vs. Nice Information Telecommunication | Golden Bridge vs. BGF Retail Co | Golden Bridge vs. Wireless Power Amplifier |
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Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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