Correlation Between BES Engineering and JSL Construction
Can any of the company-specific risk be diversified away by investing in both BES Engineering and JSL 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 JSL 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 JSL Construction Development, you can compare the effects of market volatilities on BES Engineering and JSL 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 JSL Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and JSL Construction.
Diversification Opportunities for BES Engineering and JSL Construction
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BES and JSL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and JSL Construction Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL Construction Dev 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 JSL Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL Construction Dev has no effect on the direction of BES Engineering i.e., BES Engineering and JSL Construction go up and down completely randomly.
Pair Corralation between BES Engineering and JSL Construction
Assuming the 90 days trading horizon BES Engineering Co is expected to under-perform the JSL Construction. But the stock apears to be less risky and, when comparing its historical volatility, BES Engineering Co is 1.85 times less risky than JSL Construction. The stock trades about -0.22 of its potential returns per unit of risk. The JSL Construction Development is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 9,000 in JSL Construction Development on September 24, 2024 and sell it today you would lose (170.00) from holding JSL Construction Development or give up 1.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
BES Engineering Co vs. JSL Construction Development
Performance |
Timeline |
BES Engineering |
JSL Construction Dev |
BES Engineering and JSL Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BES Engineering and JSL Construction
The main advantage of trading using opposite BES Engineering and JSL Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, JSL 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 JSL Construction will offset losses from the drop in JSL Construction'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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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