Correlation Between BES Engineering and Cleanaway
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Cleanaway 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 Cleanaway 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 Cleanaway Co, you can compare the effects of market volatilities on BES Engineering and Cleanaway 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 Cleanaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Cleanaway.
Diversification Opportunities for BES Engineering and Cleanaway
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BES and Cleanaway is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Cleanaway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway 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 Cleanaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway has no effect on the direction of BES Engineering i.e., BES Engineering and Cleanaway go up and down completely randomly.
Pair Corralation between BES Engineering and Cleanaway
Assuming the 90 days trading horizon BES Engineering Co is expected to generate 5.97 times more return on investment than Cleanaway. However, BES Engineering is 5.97 times more volatile than Cleanaway Co. It trades about 0.1 of its potential returns per unit of risk. Cleanaway Co is currently generating about -0.12 per unit of risk. If you would invest 1,085 in BES Engineering Co on September 1, 2024 and sell it today you would earn a total of 40.00 from holding BES Engineering Co or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Cleanaway Co
Performance |
| Timeline |
| BES Engineering |
| Cleanaway |
BES Engineering and Cleanaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Cleanaway
The main advantage of trading using opposite BES Engineering and Cleanaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Cleanaway 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 Cleanaway will offset losses from the drop in Cleanaway'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 |
| Cleanaway vs. BES Engineering Co | Cleanaway vs. Continental Holdings Corp | Cleanaway vs. Kee Tai Properties | Cleanaway 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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