Correlation Between Pacific Construction and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Pacific Construction and Chi Hua 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 Pacific Construction and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Construction Co and Chi Hua Fitness, you can compare the effects of market volatilities on Pacific Construction and Chi Hua 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 Pacific Construction with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Construction and Chi Hua.
Diversification Opportunities for Pacific Construction and Chi Hua
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacific and Chi is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Construction Co and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Pacific Construction 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 Pacific Construction Co are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Pacific Construction i.e., Pacific Construction and Chi Hua go up and down completely randomly.
Pair Corralation between Pacific Construction and Chi Hua
Assuming the 90 days trading horizon Pacific Construction Co is expected to under-perform the Chi Hua. In addition to that, Pacific Construction is 2.24 times more volatile than Chi Hua Fitness. It trades about -0.1 of its total potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.1 per unit of volatility. If you would invest 3,720 in Chi Hua Fitness on October 22, 2024 and sell it today you would lose (140.00) from holding Chi Hua Fitness or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Construction Co vs. Chi Hua Fitness
Performance |
| Timeline |
| Pacific Construction |
| Chi Hua Fitness |
Pacific Construction and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Construction and Chi Hua
The main advantage of trading using opposite Pacific Construction and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Construction position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Pacific Construction vs. Cathay Real Estate | Pacific Construction vs. Goldsun Building Materials | Pacific Construction vs. Kindom Construction Corp | Pacific Construction vs. Prince Housing Development |
| Chi Hua vs. U Media Communications | Chi Hua vs. Wonderful Hi Tech Co | Chi Hua vs. Emerging Display Technologies | Chi Hua vs. Loop Telecommunication International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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