Correlation Between Te Chang and Founding Construction
Can any of the company-specific risk be diversified away by investing in both Te Chang and Founding Construction 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 Te Chang and Founding Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Te Chang Construction and Founding Construction Development, you can compare the effects of market volatilities on Te Chang and Founding Construction 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 Te Chang with a short position of Founding Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Te Chang and Founding Construction.
Diversification Opportunities for Te Chang and Founding Construction
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 5511 and Founding is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Te Chang Construction and Founding Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Founding Construction and Te Chang 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 Te Chang Construction are associated (or correlated) with Founding Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Founding Construction has no effect on the direction of Te Chang i.e., Te Chang and Founding Construction go up and down completely randomly.
Pair Corralation between Te Chang and Founding Construction
Assuming the 90 days trading horizon Te Chang Construction is expected to generate 0.99 times more return on investment than Founding Construction. However, Te Chang Construction is 1.01 times less risky than Founding Construction. It trades about 0.2 of its potential returns per unit of risk. Founding Construction Development is currently generating about -0.01 per unit of risk. If you would invest 5,720 in Te Chang Construction on August 28, 2024 and sell it today you would earn a total of 560.00 from holding Te Chang Construction or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Te Chang Construction vs. Founding Construction Developm
Performance |
| Timeline |
| Te Chang Construction |
| Founding Construction |
Te Chang and Founding Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Te Chang and Founding Construction
The main advantage of trading using opposite Te Chang and Founding Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Te Chang position performs unexpectedly, Founding Construction 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 Founding Construction will offset losses from the drop in Founding Construction's long position.| Te Chang vs. United Integrated Services | Te Chang vs. CTCI Corp | Te Chang vs. Ruentex Engineering Construction | Te Chang vs. BES Engineering Co |
| Founding Construction vs. Shining Building Business | Founding Construction vs. Chong Hong Construction | Founding Construction vs. Farglory Land Development | Founding Construction vs. Sweeten Real Estate |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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