Correlation Between BES Engineering and Chung Fu
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Chung Fu 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 BES Engineering and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BES Engineering Co and Chung Fu Tex International, you can compare the effects of market volatilities on BES Engineering and Chung Fu 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 BES Engineering with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Chung Fu.
Diversification Opportunities for BES Engineering and Chung Fu
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BES and Chung is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex and BES Engineering 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 BES Engineering Co are associated (or correlated) with Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of BES Engineering i.e., BES Engineering and Chung Fu go up and down completely randomly.
Pair Corralation between BES Engineering and Chung Fu
Assuming the 90 days trading horizon BES Engineering Co is expected to generate 0.31 times more return on investment than Chung Fu. However, BES Engineering Co is 3.28 times less risky than Chung Fu. It trades about -0.22 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about -0.42 per unit of risk. If you would invest 1,140 in BES Engineering Co on September 24, 2024 and sell it today you would lose (55.00) from holding BES Engineering Co or give up 4.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
BES Engineering Co vs. Chung Fu Tex International
Performance |
Timeline |
BES Engineering |
Chung Fu Tex |
BES Engineering and Chung Fu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BES Engineering and Chung Fu
The main advantage of trading using opposite BES Engineering and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Chung Fu 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 Chung Fu will offset losses from the drop in Chung Fu's long position.BES Engineering vs. Yang Ming Marine | BES Engineering vs. Evergreen Marine Corp | BES Engineering vs. Eva Airways Corp | BES Engineering vs. U Ming Marine Transport |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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