Correlation Between Chongqing Machinery and Penta-Ocean Construction
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Penta-Ocean 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 Chongqing Machinery and Penta-Ocean Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and Penta Ocean Construction Co, you can compare the effects of market volatilities on Chongqing Machinery and Penta-Ocean 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 Chongqing Machinery with a short position of Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Penta-Ocean Construction.
Diversification Opportunities for Chongqing Machinery and Penta-Ocean Construction
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chongqing and Penta-Ocean is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta-Ocean Construction and Chongqing Machinery 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 Chongqing Machinery Electric are associated (or correlated) with Penta-Ocean Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta-Ocean Construction has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Penta-Ocean Construction go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Penta-Ocean Construction
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 4.86 times more return on investment than Penta-Ocean Construction. However, Chongqing Machinery is 4.86 times more volatile than Penta Ocean Construction Co. It trades about 0.21 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.06 per unit of risk. If you would invest 7.30 in Chongqing Machinery Electric on November 27, 2024 and sell it today you would earn a total of 3.70 from holding Chongqing Machinery Electric or generate 50.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Penta Ocean Construction Co
Performance |
| Timeline |
| Chongqing Machinery |
| Penta-Ocean Construction |
Chongqing Machinery and Penta-Ocean Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Penta-Ocean Construction
The main advantage of trading using opposite Chongqing Machinery and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Penta-Ocean 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 Penta-Ocean Construction will offset losses from the drop in Penta-Ocean Construction's long position.| Chongqing Machinery vs. Westinghouse Air Brake | Chongqing Machinery vs. UNIVMUSIC GRPADR050 | Chongqing Machinery vs. NH HOTEL GROUP | Chongqing Machinery vs. DELTA AIR LINES |
| Penta-Ocean Construction vs. CN MODERN DAIRY | Penta-Ocean Construction vs. BOVIS HOMES GROUP | Penta-Ocean Construction vs. American Homes 4 | Penta-Ocean Construction vs. Collins Foods Limited |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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