Correlation Between Hai An and Mechanics Construction
Can any of the company-specific risk be diversified away by investing in both Hai An and Mechanics 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 Hai An and Mechanics Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hai An Transport and Mechanics Construction and, you can compare the effects of market volatilities on Hai An and Mechanics 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 Hai An with a short position of Mechanics Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Mechanics Construction.
Diversification Opportunities for Hai An and Mechanics Construction
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hai and Mechanics is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Mechanics Construction and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechanics Construction and Hai An 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 Hai An Transport are associated (or correlated) with Mechanics Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechanics Construction has no effect on the direction of Hai An i.e., Hai An and Mechanics Construction go up and down completely randomly.
Pair Corralation between Hai An and Mechanics Construction
Assuming the 90 days trading horizon Hai An Transport is expected to generate 1.04 times more return on investment than Mechanics Construction. However, Hai An is 1.04 times more volatile than Mechanics Construction and. It trades about 0.08 of its potential returns per unit of risk. Mechanics Construction and is currently generating about 0.04 per unit of risk. If you would invest 2,144,928 in Hai An Transport on October 16, 2024 and sell it today you would earn a total of 2,805,072 from holding Hai An Transport or generate 130.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 88.28% |
| Values | Daily Returns |
Hai An Transport vs. Mechanics Construction and
Performance |
| Timeline |
| Hai An Transport |
| Mechanics Construction |
Hai An and Mechanics Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hai An and Mechanics Construction
The main advantage of trading using opposite Hai An and Mechanics Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hai An position performs unexpectedly, Mechanics 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 Mechanics Construction will offset losses from the drop in Mechanics Construction's long position.| Hai An vs. Elcom Technology Communications | Hai An vs. Materials Petroleum JSC | Hai An vs. Hanoi Plastics JSC | Hai An vs. Phuoc Hoa Rubber |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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