Correlation Between BES Engineering and Chien Kuo
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Chien Kuo 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 Chien Kuo 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 Chien Kuo Construction, you can compare the effects of market volatilities on BES Engineering and Chien Kuo 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 Chien Kuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Chien Kuo.
Diversification Opportunities for BES Engineering and Chien Kuo
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BES and Chien is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Chien Kuo Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Kuo Construction 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 Chien Kuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Kuo Construction has no effect on the direction of BES Engineering i.e., BES Engineering and Chien Kuo go up and down completely randomly.
Pair Corralation between BES Engineering and Chien Kuo
Assuming the 90 days trading horizon BES Engineering is expected to generate 2.33 times less return on investment than Chien Kuo. But when comparing it to its historical volatility, BES Engineering Co is 1.05 times less risky than Chien Kuo. It trades about 0.04 of its potential returns per unit of risk. Chien Kuo Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,135 in Chien Kuo Construction on August 31, 2024 and sell it today you would earn a total of 1,550 from holding Chien Kuo Construction or generate 136.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
BES Engineering Co vs. Chien Kuo Construction
Performance |
| Timeline |
| BES Engineering |
| Chien Kuo Construction |
BES Engineering and Chien Kuo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Chien Kuo
The main advantage of trading using opposite BES Engineering and Chien Kuo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Chien Kuo 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 Chien Kuo will offset losses from the drop in Chien Kuo'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 |
| Chien Kuo vs. BES Engineering Co | Chien Kuo vs. Continental Holdings Corp | Chien Kuo vs. Kee Tai Properties | Chien Kuo vs. Hung Sheng 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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