Correlation Between Construction and Hai An
Can any of the company-specific risk be diversified away by investing in both Construction and Hai An 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 Construction and Hai An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction And Investment and Hai An Transport, you can compare the effects of market volatilities on Construction and Hai An 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 Construction with a short position of Hai An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction and Hai An.
Diversification Opportunities for Construction and Hai An
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Construction and Hai is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Construction And Investment and Hai An Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hai An Transport and 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 Construction And Investment are associated (or correlated) with Hai An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hai An Transport has no effect on the direction of Construction i.e., Construction and Hai An go up and down completely randomly.
Pair Corralation between Construction and Hai An
Assuming the 90 days trading horizon Construction is expected to generate 7.29 times less return on investment than Hai An. But when comparing it to its historical volatility, Construction And Investment is 1.49 times less risky than Hai An. It trades about 0.05 of its potential returns per unit of risk. Hai An Transport is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,300,000 in Hai An Transport on September 2, 2024 and sell it today you would earn a total of 505,000 from holding Hai An Transport or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Construction And Investment vs. Hai An Transport
Performance |
| Timeline |
| Construction And Inv |
| Hai An Transport |
Construction and Hai An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction and Hai An
The main advantage of trading using opposite Construction and Hai An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction position performs unexpectedly, Hai An 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 Hai An will offset losses from the drop in Hai An's long position.| Construction vs. Mechanics Construction and | Construction vs. Saigon Viendong Technology | Construction vs. Techcom Vietnam REIT | Construction vs. Hung Hau Agricultural |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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