Correlation Between Cotec Construction and Transimex Transportation
Can any of the company-specific risk be diversified away by investing in both Cotec Construction and Transimex Transportation 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 Cotec Construction and Transimex Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cotec Construction JSC and Transimex Transportation JSC, you can compare the effects of market volatilities on Cotec Construction and Transimex Transportation 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 Cotec Construction with a short position of Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cotec Construction and Transimex Transportation.
Diversification Opportunities for Cotec Construction and Transimex Transportation
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cotec and Transimex is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cotec Construction JSC and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation and Cotec Construction 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 Cotec Construction JSC are associated (or correlated) with Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of Cotec Construction i.e., Cotec Construction and Transimex Transportation go up and down completely randomly.
Pair Corralation between Cotec Construction and Transimex Transportation
Assuming the 90 days trading horizon Cotec Construction JSC is expected to under-perform the Transimex Transportation. But the stock apears to be less risky and, when comparing its historical volatility, Cotec Construction JSC is 1.13 times less risky than Transimex Transportation. The stock trades about -0.03 of its potential returns per unit of risk. The Transimex Transportation JSC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,777,426 in Transimex Transportation JSC on September 2, 2024 and sell it today you would lose (77,426) from holding Transimex Transportation JSC or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.91% |
| Values | Daily Returns |
Cotec Construction JSC vs. Transimex Transportation JSC
Performance |
| Timeline |
| Cotec Construction JSC |
| Transimex Transportation |
Cotec Construction and Transimex Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cotec Construction and Transimex Transportation
The main advantage of trading using opposite Cotec Construction and Transimex Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cotec Construction position performs unexpectedly, Transimex Transportation 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 Transimex Transportation will offset losses from the drop in Transimex Transportation's long position.| Cotec Construction vs. FIT INVEST JSC | Cotec Construction vs. Damsan JSC | Cotec Construction vs. An Phat Plastic | Cotec Construction vs. Alphanam ME |
| Transimex Transportation vs. Song Hong Garment | Transimex Transportation vs. Alphanam ME | Transimex Transportation vs. Hochiminh City Metal | Transimex Transportation vs. Atesco Industrial Cartering |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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