Correlation Between BES Engineering and Sun Sea
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Sun Sea 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 Sun Sea 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 Sun Sea Construction, you can compare the effects of market volatilities on BES Engineering and Sun Sea 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 Sun Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Sun Sea.
Diversification Opportunities for BES Engineering and Sun Sea
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BES and Sun is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Sun Sea Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Sea 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 Sun Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Sea Construction has no effect on the direction of BES Engineering i.e., BES Engineering and Sun Sea go up and down completely randomly.
Pair Corralation between BES Engineering and Sun Sea
Assuming the 90 days trading horizon BES Engineering Co is expected to generate 2.01 times more return on investment than Sun Sea. However, BES Engineering is 2.01 times more volatile than Sun Sea Construction. It trades about 0.38 of its potential returns per unit of risk. Sun Sea Construction is currently generating about -0.4 per unit of risk. If you would invest 1,065 in BES Engineering Co on December 5, 2024 and sell it today you would earn a total of 155.00 from holding BES Engineering Co or generate 14.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
BES Engineering Co vs. Sun Sea Construction
Performance |
Timeline |
BES Engineering |
Sun Sea Construction |
BES Engineering and Sun Sea Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BES Engineering and Sun Sea
The main advantage of trading using opposite BES Engineering and Sun Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Sun Sea 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 Sun Sea will offset losses from the drop in Sun Sea's long position.BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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