Correlation Between Highwealth Construction and New Asia
Can any of the company-specific risk be diversified away by investing in both Highwealth Construction and New Asia 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 Highwealth Construction and New Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highwealth Construction Corp and New Asia Construction, you can compare the effects of market volatilities on Highwealth Construction and New Asia 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 Highwealth Construction with a short position of New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwealth Construction and New Asia.
Diversification Opportunities for Highwealth Construction and New Asia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Highwealth and New is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Highwealth Construction Corp and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction and Highwealth Construction 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 Highwealth Construction Corp are associated (or correlated) with New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of Highwealth Construction i.e., Highwealth Construction and New Asia go up and down completely randomly.
Pair Corralation between Highwealth Construction and New Asia
Assuming the 90 days trading horizon Highwealth Construction is expected to generate 24.99 times less return on investment than New Asia. But when comparing it to its historical volatility, Highwealth Construction Corp is 3.83 times less risky than New Asia. It trades about 0.06 of its potential returns per unit of risk. New Asia Construction is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,240 in New Asia Construction on October 23, 2024 and sell it today you would earn a total of 540.00 from holding New Asia Construction or generate 43.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highwealth Construction Corp vs. New Asia Construction
Performance |
| Timeline |
| Highwealth Construction |
| New Asia Construction |
Highwealth Construction and New Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwealth Construction and New Asia
The main advantage of trading using opposite Highwealth Construction and New Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwealth Construction position performs unexpectedly, New Asia 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 New Asia will offset losses from the drop in New Asia's long position.| Highwealth Construction vs. Huaku Development Co | Highwealth Construction vs. Farglory Land Development | Highwealth Construction vs. Ruentex Development Co | Highwealth Construction vs. Ruentex Industries |
| New Asia vs. BES Engineering Co | New Asia vs. Delpha Construction Co | New Asia vs. Cathay Real Estate | New Asia vs. Da Cin Construction Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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