Correlation Between Pacific Construction and I Sheng
Can any of the company-specific risk be diversified away by investing in both Pacific Construction and I Sheng 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 I Sheng 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 I Sheng Electric Wire, you can compare the effects of market volatilities on Pacific Construction and I Sheng 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 I Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Construction and I Sheng.
Diversification Opportunities for Pacific Construction and I Sheng
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pacific and 6115 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Construction Co and I Sheng Electric Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Sheng Electric 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 I Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Sheng Electric has no effect on the direction of Pacific Construction i.e., Pacific Construction and I Sheng go up and down completely randomly.
Pair Corralation between Pacific Construction and I Sheng
Assuming the 90 days trading horizon Pacific Construction Co is expected to under-perform the I Sheng. In addition to that, Pacific Construction is 2.93 times more volatile than I Sheng Electric Wire. It trades about -0.14 of its total potential returns per unit of risk. I Sheng Electric Wire is currently generating about -0.14 per unit of volatility. If you would invest 5,330 in I Sheng Electric Wire on September 12, 2024 and sell it today you would lose (100.00) from holding I Sheng Electric Wire or give up 1.88% 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. I Sheng Electric Wire
Performance |
| Timeline |
| Pacific Construction |
| I Sheng Electric |
Pacific Construction and I Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Construction and I Sheng
The main advantage of trading using opposite Pacific Construction and I Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Construction position performs unexpectedly, I Sheng 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 I Sheng will offset losses from the drop in I Sheng's long position.| Pacific Construction vs. Chong Hong Construction | Pacific Construction vs. Ruentex Development Co | Pacific Construction vs. Symtek Automation Asia | Pacific Construction vs. WiseChip Semiconductor |
| I Sheng vs. Unitech Computer Co | I Sheng vs. Chinese Maritime Transport | I Sheng vs. Cameo Communications | I Sheng vs. Compal Broadband Networks |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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