Correlation Between Bilfinger and Obayashi
Can any of the company-specific risk be diversified away by investing in both Bilfinger and Obayashi 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 Bilfinger and Obayashi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bilfinger SE ADR and Obayashi, you can compare the effects of market volatilities on Bilfinger and Obayashi 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 Bilfinger with a short position of Obayashi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilfinger and Obayashi.
Diversification Opportunities for Bilfinger and Obayashi
Very good diversification
The 3 months correlation between Bilfinger and Obayashi is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bilfinger SE ADR and Obayashi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obayashi and Bilfinger 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 Bilfinger SE ADR are associated (or correlated) with Obayashi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obayashi has no effect on the direction of Bilfinger i.e., Bilfinger and Obayashi go up and down completely randomly.
Pair Corralation between Bilfinger and Obayashi
Assuming the 90 days horizon Bilfinger SE ADR is expected to under-perform the Obayashi. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bilfinger SE ADR is 2.11 times less risky than Obayashi. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Obayashi is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,134 in Obayashi on September 1, 2024 and sell it today you would earn a total of 266.00 from holding Obayashi or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bilfinger SE ADR vs. Obayashi
Performance |
| Timeline |
| Bilfinger SE ADR |
| Obayashi |
Bilfinger and Obayashi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bilfinger and Obayashi
The main advantage of trading using opposite Bilfinger and Obayashi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bilfinger position performs unexpectedly, Obayashi 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 Obayashi will offset losses from the drop in Obayashi's long position.| Bilfinger vs. Orion Group Holdings | Bilfinger vs. Agrify Corp | Bilfinger vs. Matrix Service Co | Bilfinger vs. MYR Group |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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