Correlation Between Zhejiang Expressway and Penta-Ocean Construction
Can any of the company-specific risk be diversified away by investing in both Zhejiang Expressway and Penta-Ocean Construction 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 Zhejiang Expressway and Penta-Ocean Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhejiang Expressway Co and Penta Ocean Construction Co, you can compare the effects of market volatilities on Zhejiang Expressway and Penta-Ocean Construction 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 Zhejiang Expressway with a short position of Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Expressway and Penta-Ocean Construction.
Diversification Opportunities for Zhejiang Expressway and Penta-Ocean Construction
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Zhejiang and Penta-Ocean is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Expressway Co and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta-Ocean Construction and Zhejiang Expressway 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 Zhejiang Expressway Co are associated (or correlated) with Penta-Ocean Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta-Ocean Construction has no effect on the direction of Zhejiang Expressway i.e., Zhejiang Expressway and Penta-Ocean Construction go up and down completely randomly.
Pair Corralation between Zhejiang Expressway and Penta-Ocean Construction
Assuming the 90 days horizon Zhejiang Expressway is expected to generate 3.61 times less return on investment than Penta-Ocean Construction. But when comparing it to its historical volatility, Zhejiang Expressway Co is 1.02 times less risky than Penta-Ocean Construction. It trades about 0.01 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 374.00 in Penta Ocean Construction Co on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Penta Ocean Construction Co or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhejiang Expressway Co vs. Penta Ocean Construction Co
Performance |
| Timeline |
| Zhejiang Expressway |
| Penta-Ocean Construction |
Zhejiang Expressway and Penta-Ocean Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Expressway and Penta-Ocean Construction
The main advantage of trading using opposite Zhejiang Expressway and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Expressway position performs unexpectedly, Penta-Ocean Construction 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 Penta-Ocean Construction will offset losses from the drop in Penta-Ocean Construction's long position.| Zhejiang Expressway vs. HEALTHCARE REAL A | Zhejiang Expressway vs. Ares Management Corp | Zhejiang Expressway vs. Cardinal Health | Zhejiang Expressway vs. Ramsay Health Care |
| Penta-Ocean Construction vs. Transurban Group | Penta-Ocean Construction vs. Superior Plus Corp | Penta-Ocean Construction vs. NMI Holdings | Penta-Ocean Construction vs. Origin Agritech |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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