Correlation Between Chainqui Construction and BES Engineering
Can any of the company-specific risk be diversified away by investing in both Chainqui Construction and BES Engineering 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 Chainqui Construction and BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chainqui Construction Development and BES Engineering Co, you can compare the effects of market volatilities on Chainqui Construction and BES Engineering 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 Chainqui Construction with a short position of BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainqui Construction and BES Engineering.
Diversification Opportunities for Chainqui Construction and BES Engineering
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chainqui and BES is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chainqui Construction Developm and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering and Chainqui 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 Chainqui Construction Development are associated (or correlated) with BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of Chainqui Construction i.e., Chainqui Construction and BES Engineering go up and down completely randomly.
Pair Corralation between Chainqui Construction and BES Engineering
Assuming the 90 days trading horizon Chainqui Construction Development is expected to under-perform the BES Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Chainqui Construction Development is 1.67 times less risky than BES Engineering. The stock trades about -0.15 of its potential returns per unit of risk. The BES Engineering Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 993.00 in BES Engineering Co on November 5, 2024 and sell it today you would earn a total of 52.00 from holding BES Engineering Co or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chainqui Construction Developm vs. BES Engineering Co
Performance |
| Timeline |
| Chainqui Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BES Engineering |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chainqui Construction and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chainqui Construction and BES Engineering
The main advantage of trading using opposite Chainqui Construction and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainqui Construction position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.The idea behind Chainqui Construction Development and BES Engineering Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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