Correlation Between BES Engineering and Goodway Machine
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Goodway Machine 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 BES Engineering and Goodway Machine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BES Engineering Co and Goodway Machine Corp, you can compare the effects of market volatilities on BES Engineering and Goodway Machine 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 BES Engineering with a short position of Goodway Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Goodway Machine.
Diversification Opportunities for BES Engineering and Goodway Machine
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BES and Goodway is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Goodway Machine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodway Machine Corp and BES Engineering 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 BES Engineering Co are associated (or correlated) with Goodway Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodway Machine Corp has no effect on the direction of BES Engineering i.e., BES Engineering and Goodway Machine go up and down completely randomly.
Pair Corralation between BES Engineering and Goodway Machine
Assuming the 90 days trading horizon BES Engineering Co is expected to generate 1.87 times more return on investment than Goodway Machine. However, BES Engineering is 1.87 times more volatile than Goodway Machine Corp. It trades about 0.04 of its potential returns per unit of risk. Goodway Machine Corp is currently generating about 0.01 per unit of risk. If you would invest 843.00 in BES Engineering Co on September 2, 2024 and sell it today you would earn a total of 282.00 from holding BES Engineering Co or generate 33.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
BES Engineering Co vs. Goodway Machine Corp
Performance |
| Timeline |
| BES Engineering |
| Goodway Machine Corp |
BES Engineering and Goodway Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Goodway Machine
The main advantage of trading using opposite BES Engineering and Goodway Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Goodway Machine 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 Goodway Machine will offset losses from the drop in Goodway Machine's long position.| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
| Goodway Machine vs. Easywell Biomedicals | Goodway Machine vs. Louisa Professional Coffee | Goodway Machine vs. Great China Metal | Goodway Machine vs. Chailease Holding 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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