Correlation Between Chiu Ting and BES Engineering
Can any of the company-specific risk be diversified away by investing in both Chiu Ting and BES 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 Chiu Ting and BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiu Ting Machinery and BES Engineering Co, you can compare the effects of market volatilities on Chiu Ting and BES 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 Chiu Ting with a short position of BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiu Ting and BES Engineering.
Diversification Opportunities for Chiu Ting and BES Engineering
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chiu and BES is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chiu Ting Machinery and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering and Chiu Ting 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 Chiu Ting Machinery are associated (or correlated) with BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of Chiu Ting i.e., Chiu Ting and BES Engineering go up and down completely randomly.
Pair Corralation between Chiu Ting and BES Engineering
Assuming the 90 days trading horizon Chiu Ting Machinery is expected to under-perform the BES Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Chiu Ting Machinery is 1.02 times less risky than BES Engineering. The stock trades about -0.01 of its potential returns per unit of risk. The BES Engineering Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 820.00 in BES Engineering Co on August 31, 2024 and sell it today you would earn a total of 305.00 from holding BES Engineering Co or generate 37.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Chiu Ting Machinery vs. BES Engineering Co
Performance |
| Timeline |
| Chiu Ting Machinery |
| BES Engineering |
Chiu Ting and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiu Ting and BES Engineering
The main advantage of trading using opposite Chiu Ting and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiu Ting position performs unexpectedly, BES 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| Chiu Ting vs. BES Engineering Co | Chiu Ting vs. Continental Holdings Corp | Chiu Ting vs. Kee Tai Properties | Chiu Ting vs. Hung Sheng Construction |
| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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