Correlation Between Century Synthetic and HUD1 Investment
Can any of the company-specific risk be diversified away by investing in both Century Synthetic and HUD1 Investment 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 Century Synthetic and HUD1 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Synthetic Fiber and HUD1 Investment and, you can compare the effects of market volatilities on Century Synthetic and HUD1 Investment 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 Century Synthetic with a short position of HUD1 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Synthetic and HUD1 Investment.
Diversification Opportunities for Century Synthetic and HUD1 Investment
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Century and HUD1 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Century Synthetic Fiber and HUD1 Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUD1 Investment and Century Synthetic 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 Century Synthetic Fiber are associated (or correlated) with HUD1 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUD1 Investment has no effect on the direction of Century Synthetic i.e., Century Synthetic and HUD1 Investment go up and down completely randomly.
Pair Corralation between Century Synthetic and HUD1 Investment
Assuming the 90 days trading horizon Century Synthetic Fiber is expected to generate 0.34 times more return on investment than HUD1 Investment. However, Century Synthetic Fiber is 2.97 times less risky than HUD1 Investment. It trades about -0.09 of its potential returns per unit of risk. HUD1 Investment and is currently generating about -0.09 per unit of risk. If you would invest 2,430,000 in Century Synthetic Fiber on November 7, 2024 and sell it today you would lose (50,000) from holding Century Synthetic Fiber or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.11% |
| Values | Daily Returns |
Century Synthetic Fiber vs. HUD1 Investment and
Performance |
| Timeline |
| Century Synthetic Fiber |
| HUD1 Investment |
Century Synthetic and HUD1 Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Synthetic and HUD1 Investment
The main advantage of trading using opposite Century Synthetic and HUD1 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Synthetic position performs unexpectedly, HUD1 Investment 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 HUD1 Investment will offset losses from the drop in HUD1 Investment's long position.| Century Synthetic vs. FIT INVEST JSC | Century Synthetic vs. Damsan JSC | Century Synthetic vs. An Phat Plastic | Century Synthetic vs. APG Securities Joint |
| HUD1 Investment vs. FIT INVEST JSC | HUD1 Investment vs. Damsan JSC | HUD1 Investment vs. An Phat Plastic | HUD1 Investment vs. APG Securities Joint |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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