Correlation Between Hanshin Construction and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Sungdo Engineering 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 Hanshin Construction and Sungdo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Sungdo Engineering Construction, you can compare the effects of market volatilities on Hanshin Construction and Sungdo Engineering 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 Hanshin Construction with a short position of Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Sungdo Engineering.
Diversification Opportunities for Hanshin Construction and Sungdo Engineering
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hanshin and Sungdo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Hanshin Construction and Sungdo Engineering
Assuming the 90 days trading horizon Hanshin Construction is expected to generate 1.78 times less return on investment than Sungdo Engineering. But when comparing it to its historical volatility, Hanshin Construction Co is 1.66 times less risky than Sungdo Engineering. It trades about 0.01 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 463,000 in Sungdo Engineering Construction on September 5, 2024 and sell it today you would lose (14,000) from holding Sungdo Engineering Construction or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Sungdo Engineering Constructio
Performance |
| Timeline |
| Hanshin Construction |
| Sungdo Engineering |
Hanshin Construction and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Sungdo Engineering
The main advantage of trading using opposite Hanshin Construction and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Hanshin Construction vs. DB Insurance Co | Hanshin Construction vs. Aprogen Healthcare Games | Hanshin Construction vs. NewFlex Technology Co | Hanshin Construction vs. Global Standard Technology |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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