Correlation Between Industrial Investment and Consolidated Construction
Can any of the company-specific risk be diversified away by investing in both Industrial Investment and Consolidated 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 Industrial Investment and Consolidated Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Investment Trust and Consolidated Construction Consortium, you can compare the effects of market volatilities on Industrial Investment and Consolidated 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 Industrial Investment with a short position of Consolidated Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Consolidated Construction.
Diversification Opportunities for Industrial Investment and Consolidated Construction
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and Consolidated is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Consolidated Construction Cons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Construction and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Consolidated Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Construction has no effect on the direction of Industrial Investment i.e., Industrial Investment and Consolidated Construction go up and down completely randomly.
Pair Corralation between Industrial Investment and Consolidated Construction
Assuming the 90 days trading horizon Industrial Investment is expected to generate 5.13 times less return on investment than Consolidated Construction. But when comparing it to its historical volatility, Industrial Investment Trust is 8.97 times less risky than Consolidated Construction. It trades about 0.09 of its potential returns per unit of risk. Consolidated Construction Consortium is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Consolidated Construction Consortium on October 13, 2024 and sell it today you would earn a total of 1,563 from holding Consolidated Construction Consortium or generate 1116.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Investment Trust vs. Consolidated Construction Cons
Performance |
| Timeline |
| Industrial Investment |
| Consolidated Construction |
Industrial Investment and Consolidated Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Investment and Consolidated Construction
The main advantage of trading using opposite Industrial Investment and Consolidated Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment position performs unexpectedly, Consolidated 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 Consolidated Construction will offset losses from the drop in Consolidated Construction's long position.| Industrial Investment vs. MIRC Electronics Limited | Industrial Investment vs. Manaksia Coated Metals | Industrial Investment vs. HDFC Asset Management | Industrial Investment vs. Home First Finance |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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