Correlation Between Bright Led and CKM Building

Can any of the company-specific risk be diversified away by investing in both Bright Led and CKM Building 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 Bright Led and CKM Building into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bright Led Electronics and CKM Building Material, you can compare the effects of market volatilities on Bright Led and CKM Building 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 Bright Led with a short position of CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Led and CKM Building.

Diversification Opportunities for Bright Led and CKM Building

0.26

Correlation Coefficient

Bright Led  CKM Building

Modest diversification

The 3 months correlation between Bright and CKM is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bright Led Electronics and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material and Bright Led 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 Bright Led Electronics are associated (or correlated) with CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Bright Led i.e., Bright Led and CKM Building go up and down completely randomly.

Pair Corralation between Bright Led and CKM Building

Assuming the 90 days trading horizon Bright Led Electronics is expected to generate 3.0 times more return on investment than CKM Building. However, Bright Led is 3.0 times more volatile than CKM Building Material. It trades about 0.09 of its potential returns per unit of risk. CKM Building Material is currently generating about -0.11 per unit of risk. If you would invest  2,055  in Bright Led Electronics on October 8, 2024 and sell it today you would earn a total of  330.00  from holding Bright Led Electronics or generate 16.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bright Led Electronics  vs.  CKM Building Material

Bright Led Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Led Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bright Led showed solid returns over the last few months and may actually be approaching a breakup point.

CKM Building Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CKM Building Material has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Bright Led and CKM Building

The main advantage of trading using opposite Bright Led and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Led position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building's long position.

The idea behind Bright Led Electronics and CKM Building Material pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.