Correlation Between Sunway Construction and Central Industrial
Can any of the company-specific risk be diversified away by investing in both Sunway Construction and Central Industrial 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 Sunway Construction and Central Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunway Construction Group and Central Industrial Corp, you can compare the effects of market volatilities on Sunway Construction and Central Industrial 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 Sunway Construction with a short position of Central Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunway Construction and Central Industrial.
Diversification Opportunities for Sunway Construction and Central Industrial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sunway and Central is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sunway Construction Group and Central Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Industrial Corp and Sunway 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 Sunway Construction Group are associated (or correlated) with Central Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Industrial Corp has no effect on the direction of Sunway Construction i.e., Sunway Construction and Central Industrial go up and down completely randomly.
Pair Corralation between Sunway Construction and Central Industrial
Assuming the 90 days trading horizon Sunway Construction is expected to generate 1.37 times less return on investment than Central Industrial. But when comparing it to its historical volatility, Sunway Construction Group is 1.1 times less risky than Central Industrial. It trades about 0.09 of its potential returns per unit of risk. Central Industrial Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Central Industrial Corp on October 25, 2024 and sell it today you would earn a total of 62.00 from holding Central Industrial Corp or generate 238.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunway Construction Group vs. Central Industrial Corp
Performance |
| Timeline |
| Sunway Construction |
| Central Industrial Corp |
Sunway Construction and Central Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunway Construction and Central Industrial
The main advantage of trading using opposite Sunway Construction and Central Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunway Construction position performs unexpectedly, Central Industrial 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 Central Industrial will offset losses from the drop in Central Industrial's long position.| Sunway Construction vs. Steel Hawk Berhad | Sunway Construction vs. K One Technology Bhd | Sunway Construction vs. Datasonic Group Bhd | Sunway Construction vs. Greatech Technology Bhd |
| Central Industrial vs. K One Technology Bhd | Central Industrial vs. Kobay Tech Bhd | Central Industrial vs. Choo Bee Metal | Central Industrial vs. Cosmos Technology International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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