Correlation Between Long Bon and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Long Bon and Cathay Real 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 Long Bon and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Bon International and Cathay Real Estate, you can compare the effects of market volatilities on Long Bon and Cathay Real 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 Long Bon with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Bon and Cathay Real.
Diversification Opportunities for Long Bon and Cathay Real
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Long and Cathay is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Long Bon International and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate and Long Bon 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 Long Bon International are associated (or correlated) with Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of Long Bon i.e., Long Bon and Cathay Real go up and down completely randomly.
Pair Corralation between Long Bon and Cathay Real
Assuming the 90 days trading horizon Long Bon International is expected to generate 0.58 times more return on investment than Cathay Real. However, Long Bon International is 1.72 times less risky than Cathay Real. It trades about -0.43 of its potential returns per unit of risk. Cathay Real Estate is currently generating about -0.31 per unit of risk. If you would invest 2,165 in Long Bon International on September 25, 2024 and sell it today you would lose (180.00) from holding Long Bon International or give up 8.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Long Bon International vs. Cathay Real Estate
Performance |
Timeline |
Long Bon International |
Cathay Real Estate |
Long Bon and Cathay Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Long Bon and Cathay Real
The main advantage of trading using opposite Long Bon and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Bon position performs unexpectedly, Cathay Real 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 Cathay Real will offset losses from the drop in Cathay Real's long position.Long Bon vs. Hung Sheng Construction | Long Bon vs. Chainqui Construction Development | Long Bon vs. BES Engineering Co | Long Bon vs. Sincere Navigation Corp |
Cathay Real vs. Hung Sheng Construction | Cathay Real vs. Chainqui Construction Development | Cathay Real vs. BES Engineering Co | Cathay Real vs. Long Bon International |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Stocks Directory Find actively traded stocks across global markets | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |