Correlation Between CTCI Corp and BES Engineering
Can any of the company-specific risk be diversified away by investing in both CTCI Corp and BES Engineering 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 CTCI Corp and BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTCI Corp and BES Engineering Co, you can compare the effects of market volatilities on CTCI Corp and BES Engineering 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 CTCI Corp with a short position of BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTCI Corp and BES Engineering.
Diversification Opportunities for CTCI Corp and BES Engineering
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CTCI and BES is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering and CTCI Corp 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 CTCI Corp are associated (or correlated) with BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of CTCI Corp i.e., CTCI Corp and BES Engineering go up and down completely randomly.
Pair Corralation between CTCI Corp and BES Engineering
Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the BES Engineering. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 1.99 times less risky than BES Engineering. The stock trades about -0.42 of its potential returns per unit of risk. The BES Engineering Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,110 in BES Engineering Co on August 27, 2024 and sell it today you would earn a total of 5.00 from holding BES Engineering Co or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTCI Corp vs. BES Engineering Co
Performance |
| Timeline |
| CTCI Corp |
| BES Engineering |
CTCI Corp and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTCI Corp and BES Engineering
The main advantage of trading using opposite CTCI Corp and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTCI Corp position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| CTCI Corp vs. Taiwan Secom Co | CTCI Corp vs. Pou Chen Corp | CTCI Corp vs. Formosa Petrochemical Corp | CTCI Corp vs. Cheng Shin Rubber |
| BES Engineering vs. Sunny Friend Environmental | BES Engineering vs. TTET Union Corp | BES Engineering vs. ECOVE Environment Corp | BES Engineering vs. Yulon Finance Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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