Correlation Between Run Long and Yungshin Construction
Can any of the company-specific risk be diversified away by investing in both Run Long and Yungshin 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 Run Long and Yungshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Run Long Construction and Yungshin Construction Development, you can compare the effects of market volatilities on Run Long and Yungshin 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 Run Long with a short position of Yungshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Run Long and Yungshin Construction.
Diversification Opportunities for Run Long and Yungshin Construction
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Run and Yungshin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Run Long Construction and Yungshin Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yungshin Construction and Run Long 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 Run Long Construction are associated (or correlated) with Yungshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yungshin Construction has no effect on the direction of Run Long i.e., Run Long and Yungshin Construction go up and down completely randomly.
Pair Corralation between Run Long and Yungshin Construction
Assuming the 90 days trading horizon Run Long Construction is expected to generate 0.49 times more return on investment than Yungshin Construction. However, Run Long Construction is 2.03 times less risky than Yungshin Construction. It trades about -0.53 of its potential returns per unit of risk. Yungshin Construction Development is currently generating about -0.28 per unit of risk. If you would invest 4,950 in Run Long Construction on August 27, 2024 and sell it today you would lose (850.00) from holding Run Long Construction or give up 17.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Run Long Construction vs. Yungshin Construction Developm
Performance |
| Timeline |
| Run Long Construction |
| Yungshin Construction |
Run Long and Yungshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Run Long and Yungshin Construction
The main advantage of trading using opposite Run Long and Yungshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Run Long position performs unexpectedly, Yungshin 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 Yungshin Construction will offset losses from the drop in Yungshin Construction's long position.| Run Long vs. Highwealth Construction Corp | Run Long vs. Chong Hong Construction | Run Long vs. Farglory Land Development | Run Long vs. Huaku Development Co |
| Yungshin Construction vs. ADLINK Technology | Yungshin Construction vs. Hunya Foods Co | Yungshin Construction vs. Simplo Technology Co | Yungshin Construction vs. Shan Loong Transportation Co |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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