Correlation Between Ducgiang Chemicals and Cotec Construction
Can any of the company-specific risk be diversified away by investing in both Ducgiang Chemicals and Cotec 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 Ducgiang Chemicals and Cotec Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ducgiang Chemicals Detergent and Cotec Construction JSC, you can compare the effects of market volatilities on Ducgiang Chemicals and Cotec 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 Ducgiang Chemicals with a short position of Cotec Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ducgiang Chemicals and Cotec Construction.
Diversification Opportunities for Ducgiang Chemicals and Cotec Construction
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ducgiang and Cotec is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ducgiang Chemicals Detergent and Cotec Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cotec Construction JSC and Ducgiang Chemicals 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 Ducgiang Chemicals Detergent are associated (or correlated) with Cotec Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cotec Construction JSC has no effect on the direction of Ducgiang Chemicals i.e., Ducgiang Chemicals and Cotec Construction go up and down completely randomly.
Pair Corralation between Ducgiang Chemicals and Cotec Construction
Assuming the 90 days trading horizon Ducgiang Chemicals Detergent is expected to generate 0.99 times more return on investment than Cotec Construction. However, Ducgiang Chemicals Detergent is 1.01 times less risky than Cotec Construction. It trades about -0.04 of its potential returns per unit of risk. Cotec Construction JSC is currently generating about -0.08 per unit of risk. If you would invest 11,140,000 in Ducgiang Chemicals Detergent on September 2, 2024 and sell it today you would lose (190,000) from holding Ducgiang Chemicals Detergent or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ducgiang Chemicals Detergent vs. Cotec Construction JSC
Performance |
| Timeline |
| Ducgiang Chemicals |
| Cotec Construction JSC |
Ducgiang Chemicals and Cotec Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ducgiang Chemicals and Cotec Construction
The main advantage of trading using opposite Ducgiang Chemicals and Cotec Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ducgiang Chemicals position performs unexpectedly, Cotec 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 Cotec Construction will offset losses from the drop in Cotec Construction's long position.| Ducgiang Chemicals vs. FIT INVEST JSC | Ducgiang Chemicals vs. Damsan JSC | Ducgiang Chemicals vs. An Phat Plastic | Ducgiang Chemicals vs. Alphanam ME |
| Cotec Construction vs. FIT INVEST JSC | Cotec Construction vs. Damsan JSC | Cotec Construction vs. An Phat Plastic | Cotec Construction vs. Alphanam ME |
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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