Correlation Between BES Engineering and Pacific Construction
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Pacific 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 BES Engineering and Pacific Construction 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 Pacific Construction Co, you can compare the effects of market volatilities on BES Engineering and Pacific 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 BES Engineering with a short position of Pacific Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Pacific Construction.
Diversification Opportunities for BES Engineering and Pacific Construction
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BES and Pacific is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Pacific Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Construction 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 Pacific Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Construction has no effect on the direction of BES Engineering i.e., BES Engineering and Pacific Construction go up and down completely randomly.
Pair Corralation between BES Engineering and Pacific Construction
Assuming the 90 days trading horizon BES Engineering Co is expected to generate 1.07 times more return on investment than Pacific Construction. However, BES Engineering is 1.07 times more volatile than Pacific Construction Co. It trades about 0.03 of its potential returns per unit of risk. Pacific Construction Co is currently generating about 0.03 per unit of risk. If you would invest 833.00 in BES Engineering Co on October 13, 2024 and sell it today you would earn a total of 155.00 from holding BES Engineering Co or generate 18.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.79% |
Values | Daily Returns |
BES Engineering Co vs. Pacific Construction Co
Performance |
Timeline |
BES Engineering |
Pacific Construction |
BES Engineering and Pacific Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BES Engineering and Pacific Construction
The main advantage of trading using opposite BES Engineering and Pacific Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Pacific 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 Pacific Construction will offset losses from the drop in Pacific Construction's long position.BES Engineering vs. Hota Industrial Mfg | BES Engineering vs. Sinbon Electronics Co | BES Engineering vs. Tong Hsing Electronic | BES Engineering vs. Flexium Interconnect |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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