Correlation Between Chong Hong and JSL Construction
Can any of the company-specific risk be diversified away by investing in both Chong Hong and JSL 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 Chong Hong and JSL Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chong Hong Construction and JSL Construction Development, you can compare the effects of market volatilities on Chong Hong and JSL 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 Chong Hong with a short position of JSL Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and JSL Construction.
Diversification Opportunities for Chong Hong and JSL Construction
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chong and JSL is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and JSL Construction Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL Construction Dev and Chong Hong 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 Chong Hong Construction are associated (or correlated) with JSL Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL Construction Dev has no effect on the direction of Chong Hong i.e., Chong Hong and JSL Construction go up and down completely randomly.
Pair Corralation between Chong Hong and JSL Construction
Assuming the 90 days trading horizon Chong Hong Construction is expected to generate 1.05 times more return on investment than JSL Construction. However, Chong Hong is 1.05 times more volatile than JSL Construction Development. It trades about -0.04 of its potential returns per unit of risk. JSL Construction Development is currently generating about -0.07 per unit of risk. If you would invest 9,070 in Chong Hong Construction on January 15, 2025 and sell it today you would lose (630.00) from holding Chong Hong Construction or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. JSL Construction Development
Performance |
| Timeline |
| Chong Hong Construction |
| JSL Construction Dev |
Chong Hong and JSL Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and JSL Construction
The main advantage of trading using opposite Chong Hong and JSL Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, JSL 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 JSL Construction will offset losses from the drop in JSL Construction's long position.| Chong Hong vs. Huaku Development Co | Chong Hong vs. Farglory Land Development | Chong Hong vs. Highwealth Construction Corp | Chong Hong vs. Ruentex Development Co |
| JSL Construction vs. Chong Hong Construction | JSL Construction vs. Farglory Land Development | JSL Construction vs. Hung Ching Development | JSL Construction vs. Information Technology Total |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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