Correlation Between Penta-Ocean Construction and China Resources
Can any of the company-specific risk be diversified away by investing in both Penta-Ocean Construction and China Resources 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 China Resources 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 China Resources Beer, you can compare the effects of market volatilities on Penta-Ocean Construction and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta-Ocean Construction and China Resources.
Diversification Opportunities for Penta-Ocean Construction and China Resources
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Penta-Ocean and China is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and China Resources go up and down completely randomly.
Pair Corralation between Penta-Ocean Construction and China Resources
Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.39 times more return on investment than China Resources. However, Penta Ocean Construction Co is 2.57 times less risky than China Resources. It trades about 0.12 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.27 per unit of risk. If you would invest 388.00 in Penta Ocean Construction Co on October 11, 2024 and sell it today you would earn a total of 8.00 from holding Penta Ocean Construction Co or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. China Resources Beer
Performance |
| Timeline |
| Penta-Ocean Construction |
| China Resources Beer |
Penta-Ocean Construction and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta-Ocean Construction and China Resources
The main advantage of trading using opposite Penta-Ocean Construction and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta-Ocean Construction position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Penta-Ocean Construction vs. Townsquare Media | Penta-Ocean Construction vs. Tencent Music Entertainment | Penta-Ocean Construction vs. CARSALESCOM | Penta-Ocean Construction vs. REMEDY ENTERTAINMENT OYJ |
| China Resources vs. Aluminum of | China Resources vs. Penta Ocean Construction Co | China Resources vs. SIERRA METALS | China Resources vs. Daito Trust Construction |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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