Correlation Between Chien Kuo and Cleanaway

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

By analyzing existing cross correlation between Chien Kuo Construction and Cleanaway Co, you can compare the effects of market volatilities on Chien Kuo and Cleanaway 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 Chien Kuo with a short position of Cleanaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and Cleanaway.

Diversification Opportunities for Chien Kuo and Cleanaway

-0.31

Correlation Coefficient

Chien Kuo  Cleanaway

Very good diversification

The 3 months correlation between Chien and Cleanaway is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction and Cleanaway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway and Chien Kuo 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 Chien Kuo Construction are associated (or correlated) with Cleanaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway has no effect on the direction of Chien Kuo i.e., Chien Kuo and Cleanaway go up and down completely randomly.

Pair Corralation between Chien Kuo and Cleanaway

Assuming the 90 days trading horizon Chien Kuo Construction is expected to generate 2.73 times more return on investment than Cleanaway. However, Chien Kuo is 2.73 times more volatile than Cleanaway Co. It trades about 0.09 of its potential returns per unit of risk. Cleanaway Co is currently generating about 0.0 per unit of risk. If you would invest  1,130  in Chien Kuo Construction on October 9, 2024 and sell it today you would earn a total of  1,440  from holding Chien Kuo Construction or generate 127.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Chien Kuo Construction  vs.  Cleanaway Co

Chien Kuo Construction

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chien Kuo Construction are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chien Kuo showed solid returns over the last few months and may actually be approaching a breakup point.

Cleanaway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cleanaway is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chien Kuo and Cleanaway

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

The idea behind Chien Kuo Construction and Cleanaway Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..