Correlation Between Pacific Construction and Te Chang
Can any of the company-specific risk be diversified away by investing in both Pacific Construction and Te Chang 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 Te Chang 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 Te Chang Construction, you can compare the effects of market volatilities on Pacific Construction and Te Chang 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 Te Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Construction and Te Chang.
Diversification Opportunities for Pacific Construction and Te Chang
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pacific and 5511 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Construction Co and Te Chang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Te Chang Construction 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 Te Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Te Chang Construction has no effect on the direction of Pacific Construction i.e., Pacific Construction and Te Chang go up and down completely randomly.
Pair Corralation between Pacific Construction and Te Chang
Assuming the 90 days trading horizon Pacific Construction Co is expected to generate 1.54 times more return on investment than Te Chang. However, Pacific Construction is 1.54 times more volatile than Te Chang Construction. It trades about -0.01 of its potential returns per unit of risk. Te Chang Construction is currently generating about -0.02 per unit of risk. If you would invest 1,290 in Pacific Construction Co on September 1, 2024 and sell it today you would lose (95.00) from holding Pacific Construction Co or give up 7.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Construction Co vs. Te Chang Construction
Performance |
| Timeline |
| Pacific Construction |
| Te Chang Construction |
Pacific Construction and Te Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Construction and Te Chang
The main advantage of trading using opposite Pacific Construction and Te Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Construction position performs unexpectedly, Te Chang 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 Te Chang will offset losses from the drop in Te Chang'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 |
| Te Chang vs. Ruentex Development Co | Te Chang vs. United Integrated Services | Te Chang vs. CTCI Corp | Te Chang vs. Continental Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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