Correlation Between Theragen Etex and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Theragen Etex 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 Theragen Etex and Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Theragen Etex CoLtd and Hanshin Construction Co, you can compare the effects of market volatilities on Theragen Etex 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 Theragen Etex with a short position of Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Theragen Etex and Hanshin Construction.
Diversification Opportunities for Theragen Etex and Hanshin Construction
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Theragen and Hanshin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Theragen Etex CoLtd and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction and Theragen Etex 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 Theragen Etex CoLtd 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 Theragen Etex i.e., Theragen Etex and Hanshin Construction go up and down completely randomly.
Pair Corralation between Theragen Etex and Hanshin Construction
Assuming the 90 days trading horizon Theragen Etex CoLtd is expected to generate 1.03 times more return on investment than Hanshin Construction. However, Theragen Etex is 1.03 times more volatile than Hanshin Construction Co. It trades about -0.15 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.19 per unit of risk. If you would invest 312,500 in Theragen Etex CoLtd on November 3, 2024 and sell it today you would lose (9,500) from holding Theragen Etex CoLtd or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Theragen Etex CoLtd vs. Hanshin Construction Co
Performance |
| Timeline |
| Theragen Etex CoLtd |
| Hanshin Construction |
Theragen Etex and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Theragen Etex and Hanshin Construction
The main advantage of trading using opposite Theragen Etex and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Theragen Etex 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.| Theragen Etex vs. Samsung Electronics Co | Theragen Etex vs. Samsung Electronics Co | Theragen Etex vs. KB Financial Group | Theragen Etex vs. Shinhan Financial Group |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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