Correlation Between CBI and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both CBI 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 CBI and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBI Co and Hanshin Construction Co, you can compare the effects of market volatilities on CBI 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 CBI with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBI and Hanshin Construction.
Diversification Opportunities for CBI and Hanshin Construction
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CBI and Hanshin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CBI Co and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and CBI 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 CBI Co 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 CBI i.e., CBI and Hanshin Construction go up and down completely randomly.
Pair Corralation between CBI and Hanshin Construction
Assuming the 90 days trading horizon CBI Co is expected to under-perform the Hanshin Construction. In addition to that, CBI is 2.23 times more volatile than Hanshin Construction Co. It trades about -0.06 of its total potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.02 per unit of volatility. If you would invest 858,549 in Hanshin Construction Co on September 12, 2024 and sell it today you would lose (205,549) from holding Hanshin Construction Co or give up 23.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.44% |
| Values | Daily Returns |
CBI Co vs. Hanshin Construction Co
Performance |
| Timeline |
| CBI Co |
| Hanshin Construction |
CBI and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBI and Hanshin Construction
The main advantage of trading using opposite CBI and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBI 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.| CBI vs. Hanshin Construction Co | CBI vs. Dongwoo Farm To | CBI vs. Samsung Life Insurance | CBI vs. Shinsegae Engineering Construction |
| Hanshin Construction vs. Samsung Electronics Co | Hanshin Construction vs. Samsung Electronics Co | Hanshin Construction vs. SK Hynix | Hanshin Construction vs. POSCO Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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