Correlation Between Century Wind and Soft World
Can any of the company-specific risk be diversified away by investing in both Century Wind and Soft World 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 Soft World 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 Soft World International, you can compare the effects of market volatilities on Century Wind and Soft World 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 Soft World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and Soft World.
Diversification Opportunities for Century Wind and Soft World
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and Soft is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and Soft World International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soft World International 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 Soft World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soft World International has no effect on the direction of Century Wind i.e., Century Wind and Soft World go up and down completely randomly.
Pair Corralation between Century Wind and Soft World
Assuming the 90 days trading horizon Century Wind Power is expected to under-perform the Soft World. In addition to that, Century Wind is 1.36 times more volatile than Soft World International. It trades about -0.08 of its total potential returns per unit of risk. Soft World International is currently generating about -0.04 per unit of volatility. If you would invest 14,600 in Soft World International on August 31, 2024 and sell it today you would lose (1,700) from holding Soft World International or give up 11.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Wind Power vs. Soft World International
Performance |
| Timeline |
| Century Wind Power |
| Soft World International |
Century Wind and Soft World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Wind and Soft World
The main advantage of trading using opposite Century Wind and Soft World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, Soft World 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 Soft World will offset losses from the drop in Soft World's long position.| Century Wind vs. TWOWAY Communications | Century Wind vs. Hotel Holiday Garden | Century Wind vs. FarGlory Hotel Co | Century Wind vs. Tait Marketing Distribution |
| Soft World vs. Gamania Digital Entertainment | Soft World vs. Softstar Entertainment | Soft World vs. X Legend Entertainment Co | Soft World vs. Userjoy Technology 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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