Correlation Between Century Wind and Tang Eng
Can any of the company-specific risk be diversified away by investing in both Century Wind and Tang Eng 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 Wind and Tang Eng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and Tang Eng Iron, you can compare the effects of market volatilities on Century Wind and Tang Eng 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 Wind with a short position of Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and Tang Eng.
Diversification Opportunities for Century Wind and Tang Eng
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and Tang is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron and Century Wind 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 Wind Power are associated (or correlated) with Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Century Wind i.e., Century Wind and Tang Eng go up and down completely randomly.
Pair Corralation between Century Wind and Tang Eng
Assuming the 90 days trading horizon Century Wind Power is expected to generate 0.79 times more return on investment than Tang Eng. However, Century Wind Power is 1.26 times less risky than Tang Eng. It trades about -0.06 of its potential returns per unit of risk. Tang Eng Iron is currently generating about -0.12 per unit of risk. If you would invest 30,400 in Century Wind Power on September 21, 2024 and sell it today you would lose (400.00) from holding Century Wind Power or give up 1.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Century Wind Power vs. Tang Eng Iron
Performance |
Timeline |
Century Wind Power |
Tang Eng Iron |
Century Wind and Tang Eng Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Century Wind and Tang Eng
The main advantage of trading using opposite Century Wind and Tang Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, Tang Eng 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 Tang Eng will offset losses from the drop in Tang Eng's long position.Century Wind vs. Trade Van Information Services | ||
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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 Stocks Directory module to find actively traded stocks across global markets.
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