Correlation Between CKM Building and TWOWAY Communications
Can any of the company-specific risk be diversified away by investing in both CKM Building and TWOWAY Communications 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 TWOWAY Communications 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 TWOWAY Communications, you can compare the effects of market volatilities on CKM Building and TWOWAY Communications 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 TWOWAY Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKM Building and TWOWAY Communications.
Diversification Opportunities for CKM Building and TWOWAY Communications
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CKM and TWOWAY is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CKM Building Material and TWOWAY Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TWOWAY Communications 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 TWOWAY Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TWOWAY Communications has no effect on the direction of CKM Building i.e., CKM Building and TWOWAY Communications go up and down completely randomly.
Pair Corralation between CKM Building and TWOWAY Communications
Assuming the 90 days trading horizon CKM Building is expected to generate 2.83 times less return on investment than TWOWAY Communications. But when comparing it to its historical volatility, CKM Building Material is 1.82 times less risky than TWOWAY Communications. It trades about 0.09 of its potential returns per unit of risk. TWOWAY Communications is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,120 in TWOWAY Communications on October 16, 2024 and sell it today you would earn a total of 10,380 from holding TWOWAY Communications or generate 926.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CKM Building Material vs. TWOWAY Communications
Performance |
| Timeline |
| CKM Building Material |
| TWOWAY Communications |
CKM Building and TWOWAY Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CKM Building and TWOWAY Communications
The main advantage of trading using opposite CKM Building and TWOWAY Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CKM Building position performs unexpectedly, TWOWAY Communications 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 TWOWAY Communications will offset losses from the drop in TWOWAY Communications' long position.| CKM Building vs. Johnson Chemical Pharmaceutical | CKM Building vs. Formosa Chemicals Fibre | CKM Building vs. Taichung Commercial Bank | CKM Building vs. PChome Online |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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