Correlation Between BES Engineering and Century Wind
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Century Wind 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 Century Wind 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 Century Wind Power, you can compare the effects of market volatilities on BES Engineering and Century Wind 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 Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Century Wind.
Diversification Opportunities for BES Engineering and Century Wind
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BES and Century is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power 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 Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of BES Engineering i.e., BES Engineering and Century Wind go up and down completely randomly.
Pair Corralation between BES Engineering and Century Wind
Assuming the 90 days trading horizon BES Engineering Co is expected to generate 1.56 times more return on investment than Century Wind. However, BES Engineering is 1.56 times more volatile than Century Wind Power. It trades about -0.13 of its potential returns per unit of risk. Century Wind Power is currently generating about -0.21 per unit of risk. If you would invest 1,220 in BES Engineering Co on August 30, 2024 and sell it today you would lose (110.00) from holding BES Engineering Co or give up 9.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Century Wind Power
Performance |
| Timeline |
| BES Engineering |
| Century Wind Power |
BES Engineering and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Century Wind
The main advantage of trading using opposite BES Engineering and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind'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 |
| Century Wind vs. Ruentex Development Co | Century Wind vs. United Integrated Services | Century Wind vs. CTCI Corp | Century Wind vs. Ruentex Engineering Construction |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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