Correlation Between Prime Office and Yong Concrete
Can any of the company-specific risk be diversified away by investing in both Prime Office and Yong Concrete 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 Prime Office and Yong Concrete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Office Leasehold and Yong Concrete PCL, you can compare the effects of market volatilities on Prime Office and Yong Concrete 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 Prime Office with a short position of Yong Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Office and Yong Concrete.
Diversification Opportunities for Prime Office and Yong Concrete
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prime and Yong is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Prime Office Leasehold and Yong Concrete PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Concrete PCL and Prime Office 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 Prime Office Leasehold are associated (or correlated) with Yong Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Concrete PCL has no effect on the direction of Prime Office i.e., Prime Office and Yong Concrete go up and down completely randomly.
Pair Corralation between Prime Office and Yong Concrete
Assuming the 90 days trading horizon Prime Office Leasehold is expected to generate 0.47 times more return on investment than Yong Concrete. However, Prime Office Leasehold is 2.14 times less risky than Yong Concrete. It trades about 0.08 of its potential returns per unit of risk. Yong Concrete PCL is currently generating about -0.22 per unit of risk. If you would invest 608.00 in Prime Office Leasehold on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Prime Office Leasehold or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Prime Office Leasehold vs. Yong Concrete PCL
Performance |
| Timeline |
| Prime Office Leasehold |
| Yong Concrete PCL |
Prime Office and Yong Concrete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Office and Yong Concrete
The main advantage of trading using opposite Prime Office and Yong Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Office position performs unexpectedly, Yong Concrete 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 Yong Concrete will offset losses from the drop in Yong Concrete's long position.| Prime Office vs. CPN Commercial Growth | Prime Office vs. Quality Houses Property | Prime Office vs. LH Shopping Centers |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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