Correlation Between BES Engineering and Champion Building
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Champion Building 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 Champion Building 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 Champion Building Materials, you can compare the effects of market volatilities on BES Engineering and Champion Building 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 Champion Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Champion Building.
Diversification Opportunities for BES Engineering and Champion Building
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BES and Champion is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Champion Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Building 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 Champion Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Building has no effect on the direction of BES Engineering i.e., BES Engineering and Champion Building go up and down completely randomly.
Pair Corralation between BES Engineering and Champion Building
Assuming the 90 days trading horizon BES Engineering Co is expected to under-perform the Champion Building. But the stock apears to be less risky and, when comparing its historical volatility, BES Engineering Co is 1.39 times less risky than Champion Building. The stock trades about -0.11 of its potential returns per unit of risk. The Champion Building Materials is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,170 in Champion Building Materials on September 2, 2024 and sell it today you would lose (130.00) from holding Champion Building Materials or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Champion Building Materials
Performance |
| Timeline |
| BES Engineering |
| Champion Building |
BES Engineering and Champion Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Champion Building
The main advantage of trading using opposite BES Engineering and Champion Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Champion Building 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 Champion Building will offset losses from the drop in Champion Building'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 |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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