Correlation Between Penta-Ocean Construction and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both Penta-Ocean Construction and Chongqing Machinery 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 Penta-Ocean Construction and Chongqing Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penta Ocean Construction Co and Chongqing Machinery Electric, you can compare the effects of market volatilities on Penta-Ocean Construction and Chongqing Machinery 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 Penta-Ocean Construction with a short position of Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta-Ocean Construction and Chongqing Machinery.
Diversification Opportunities for Penta-Ocean Construction and Chongqing Machinery
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Penta-Ocean and Chongqing is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery and Penta-Ocean 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 Penta Ocean Construction Co are associated (or correlated) with Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and Chongqing Machinery go up and down completely randomly.
Pair Corralation between Penta-Ocean Construction and Chongqing Machinery
Assuming the 90 days horizon Penta-Ocean Construction is expected to generate 62.69 times less return on investment than Chongqing Machinery. But when comparing it to its historical volatility, Penta Ocean Construction Co is 3.94 times less risky than Chongqing Machinery. It trades about 0.0 of its potential returns per unit of risk. Chongqing Machinery Electric is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.22 in Chongqing Machinery Electric on November 27, 2024 and sell it today you would earn a total of 8.78 from holding Chongqing Machinery Electric or generate 395.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. Chongqing Machinery Electric
Performance |
| Timeline |
| Penta-Ocean Construction |
| Chongqing Machinery |
Penta-Ocean Construction and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta-Ocean Construction and Chongqing Machinery
The main advantage of trading using opposite Penta-Ocean Construction and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta-Ocean Construction position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| Penta-Ocean Construction vs. CN MODERN DAIRY | Penta-Ocean Construction vs. BOVIS HOMES GROUP | Penta-Ocean Construction vs. American Homes 4 | Penta-Ocean Construction vs. Collins Foods Limited |
| Chongqing Machinery vs. Westinghouse Air Brake | Chongqing Machinery vs. UNIVMUSIC GRPADR050 | Chongqing Machinery vs. NH HOTEL GROUP | Chongqing Machinery vs. DELTA AIR LINES |
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.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Transaction History View history of all your transactions and understand their impact on performance |