Correlation Between BES Engineering and Long Bon
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Long Bon 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 Long Bon 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 Long Bon International, you can compare the effects of market volatilities on BES Engineering and Long Bon 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 Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Long Bon.
Diversification Opportunities for BES Engineering and Long Bon
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BES and Long is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International 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 Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of BES Engineering i.e., BES Engineering and Long Bon go up and down completely randomly.
Pair Corralation between BES Engineering and Long Bon
Assuming the 90 days trading horizon BES Engineering is expected to generate 1.43 times less return on investment than Long Bon. In addition to that, BES Engineering is 1.02 times more volatile than Long Bon International. It trades about 0.32 of its total potential returns per unit of risk. Long Bon International is currently generating about 0.47 per unit of volatility. If you would invest 1,900 in Long Bon International on December 11, 2024 and sell it today you would earn a total of 315.00 from holding Long Bon International or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Long Bon International
Performance |
| Timeline |
| BES Engineering |
| Long Bon International |
BES Engineering and Long Bon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Long Bon
The main advantage of trading using opposite BES Engineering and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon'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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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