Correlation Between Century Wind and United Radiant
Can any of the company-specific risk be diversified away by investing in both Century Wind and United Radiant 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 Century Wind and United Radiant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and United Radiant Technology, you can compare the effects of market volatilities on Century Wind and United Radiant 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 Century Wind with a short position of United Radiant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and United Radiant.
Diversification Opportunities for Century Wind and United Radiant
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Century and United is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and United Radiant Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Radiant Technology and Century Wind 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 Century Wind Power are associated (or correlated) with United Radiant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Radiant Technology has no effect on the direction of Century Wind i.e., Century Wind and United Radiant go up and down completely randomly.
Pair Corralation between Century Wind and United Radiant
Assuming the 90 days trading horizon Century Wind Power is expected to generate 1.89 times more return on investment than United Radiant. However, Century Wind is 1.89 times more volatile than United Radiant Technology. It trades about 0.07 of its potential returns per unit of risk. United Radiant Technology is currently generating about 0.06 per unit of risk. If you would invest 18,484 in Century Wind Power on September 4, 2024 and sell it today you would earn a total of 11,616 from holding Century Wind Power or generate 62.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Wind Power vs. United Radiant Technology
Performance |
| Timeline |
| Century Wind Power |
| United Radiant Technology |
Century Wind and United Radiant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Wind and United Radiant
The main advantage of trading using opposite Century Wind and United Radiant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, United Radiant 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 United Radiant will offset losses from the drop in United Radiant's long position.| Century Wind vs. Cleanaway Co | Century Wind vs. Simple Mart Retail | Century Wind vs. WINSON Machinery Co | Century Wind vs. ReaLy Development Construction |
| United Radiant vs. Hon Hai Precision | United Radiant vs. Delta Electronics | United Radiant vs. LARGAN Precision Co | United Radiant vs. AU Optronics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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