Correlation Between Shining Building and Long Bon
Can any of the company-specific risk be diversified away by investing in both Shining Building and Long Bon 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 Shining Building and Long Bon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shining Building Business and Long Bon International, you can compare the effects of market volatilities on Shining Building and Long Bon 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 Shining Building with a short position of Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shining Building and Long Bon.
Diversification Opportunities for Shining Building and Long Bon
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shining and Long is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shining Building Business and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International and Shining Building 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 Shining Building Business are associated (or correlated) with Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of Shining Building i.e., Shining Building and Long Bon go up and down completely randomly.
Pair Corralation between Shining Building and Long Bon
Assuming the 90 days trading horizon Shining Building Business is expected to generate 1.38 times more return on investment than Long Bon. However, Shining Building is 1.38 times more volatile than Long Bon International. It trades about 0.02 of its potential returns per unit of risk. Long Bon International is currently generating about 0.02 per unit of risk. If you would invest 929.00 in Shining Building Business on October 25, 2024 and sell it today you would earn a total of 116.00 from holding Shining Building Business or generate 12.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shining Building Business vs. Long Bon International
Performance |
| Timeline |
| Shining Building Business |
| Long Bon International |
Shining Building and Long Bon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shining Building and Long Bon
The main advantage of trading using opposite Shining Building and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shining Building position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon's long position.| Shining Building vs. Farglory Land Development | Shining Building vs. Radium Life Tech | Shining Building vs. Huaku Development Co | Shining Building vs. Chong Hong Construction |
| Long Bon vs. Shining Building Business | Long Bon vs. Chong Hong Construction | Long Bon vs. Farglory Land Development | Long Bon 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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