Correlation Between Founding Construction and WINSON Machinery
Can any of the company-specific risk be diversified away by investing in both Founding Construction and WINSON Machinery 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 Founding Construction and WINSON Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Founding Construction Development and WINSON Machinery Co, you can compare the effects of market volatilities on Founding Construction and WINSON Machinery 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 Founding Construction with a short position of WINSON Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Founding Construction and WINSON Machinery.
Diversification Opportunities for Founding Construction and WINSON Machinery
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Founding and WINSON is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Founding Construction Developm and WINSON Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINSON Machinery and Founding 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 Founding Construction Development are associated (or correlated) with WINSON Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINSON Machinery has no effect on the direction of Founding Construction i.e., Founding Construction and WINSON Machinery go up and down completely randomly.
Pair Corralation between Founding Construction and WINSON Machinery
Assuming the 90 days trading horizon Founding Construction Development is expected to generate 0.9 times more return on investment than WINSON Machinery. However, Founding Construction Development is 1.11 times less risky than WINSON Machinery. It trades about 0.17 of its potential returns per unit of risk. WINSON Machinery Co is currently generating about -0.15 per unit of risk. If you would invest 2,005 in Founding Construction Development on August 24, 2024 and sell it today you would earn a total of 85.00 from holding Founding Construction Development or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Founding Construction Developm vs. WINSON Machinery Co
Performance |
| Timeline |
| Founding Construction |
| WINSON Machinery |
Founding Construction and WINSON Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Founding Construction and WINSON Machinery
The main advantage of trading using opposite Founding Construction and WINSON Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Founding Construction position performs unexpectedly, WINSON Machinery 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 WINSON Machinery will offset losses from the drop in WINSON Machinery's long position.| Founding Construction vs. Chainqui Construction Development | Founding Construction vs. Kee Tai Properties | Founding Construction vs. Zinwell | Founding Construction vs. Symtek Automation Asia |
| WINSON Machinery vs. Cheng Shin Rubber | WINSON Machinery vs. TSRC Corp | WINSON Machinery vs. Taiwan Cement Corp | WINSON Machinery vs. China Steel Chemical |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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