Correlation Between BES Engineering and Oriental Union
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Oriental Union 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 Oriental Union 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 Oriental Union Chemical, you can compare the effects of market volatilities on BES Engineering and Oriental Union 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 Oriental Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Oriental Union.
Diversification Opportunities for BES Engineering and Oriental Union
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BES and Oriental is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Oriental Union Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Union Chemical 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 Oriental Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Union Chemical has no effect on the direction of BES Engineering i.e., BES Engineering and Oriental Union go up and down completely randomly.
Pair Corralation between BES Engineering and Oriental Union
Assuming the 90 days trading horizon BES Engineering Co is expected to under-perform the Oriental Union. In addition to that, BES Engineering is 1.56 times more volatile than Oriental Union Chemical. It trades about -0.14 of its total potential returns per unit of risk. Oriental Union Chemical is currently generating about -0.03 per unit of volatility. If you would invest 1,720 in Oriental Union Chemical on September 1, 2024 and sell it today you would lose (100.00) from holding Oriental Union Chemical or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Oriental Union Chemical
Performance |
| Timeline |
| BES Engineering |
| Oriental Union Chemical |
BES Engineering and Oriental Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Oriental Union
The main advantage of trading using opposite BES Engineering and Oriental Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Oriental Union 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 Oriental Union will offset losses from the drop in Oriental Union'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 |
| Oriental Union vs. Basso Industry Corp | Oriental Union vs. Chung Hsin Electric Machinery | Oriental Union vs. TYC Brother Industrial | Oriental Union vs. TECO Electric Machinery |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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