Correlation Between CKM Building and Eternal Materials
Can any of the company-specific risk be diversified away by investing in both CKM Building and Eternal Materials 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 CKM Building and Eternal Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CKM Building Material and Eternal Materials Co, you can compare the effects of market volatilities on CKM Building and Eternal Materials 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 CKM Building with a short position of Eternal Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKM Building and Eternal Materials.
Diversification Opportunities for CKM Building and Eternal Materials
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CKM and Eternal is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CKM Building Material and Eternal Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Materials and CKM 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 CKM Building Material are associated (or correlated) with Eternal Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Materials has no effect on the direction of CKM Building i.e., CKM Building and Eternal Materials go up and down completely randomly.
Pair Corralation between CKM Building and Eternal Materials
Assuming the 90 days trading horizon CKM Building Material is expected to generate 1.74 times more return on investment than Eternal Materials. However, CKM Building is 1.74 times more volatile than Eternal Materials Co. It trades about 0.09 of its potential returns per unit of risk. Eternal Materials Co is currently generating about -0.01 per unit of risk. If you would invest 1,572 in CKM Building Material on November 19, 2024 and sell it today you would earn a total of 2,078 from holding CKM Building Material or generate 132.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
CKM Building Material vs. Eternal Materials Co
Performance |
| Timeline |
| CKM Building Material |
| Eternal Materials |
CKM Building and Eternal Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKM Building and Eternal Materials
The main advantage of trading using opposite CKM Building and Eternal Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKM Building position performs unexpectedly, Eternal Materials 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 Eternal Materials will offset losses from the drop in Eternal Materials' long position.| CKM Building vs. Asia Metal Industries | CKM Building vs. Compal Broadband Networks | CKM Building vs. Healthconn Corp | CKM Building vs. Louisa Professional Coffee |
| Eternal Materials vs. Taiwan Fertilizer Co | Eternal Materials vs. Nan Ya Plastics | Eternal Materials vs. Formosa Chemicals Fibre | Eternal Materials vs. Far Eastern New |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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