Correlation Between Shining Building and Prince Housing

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

By analyzing existing cross correlation between Shining Building Business and Prince Housing Development, you can compare the effects of market volatilities on Shining Building and Prince Housing 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 Shining Building with a short position of Prince Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shining Building and Prince Housing.

Diversification Opportunities for Shining Building and Prince Housing

0.73

Correlation Coefficient

Shining Building  Prince Housing

Poor diversification

The 3 months correlation between Shining and Prince is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shining Building Business and Prince Housing Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prince Housing Devel and Shining Building 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 Shining Building Business are associated (or correlated) with Prince Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prince Housing Devel has no effect on the direction of Shining Building i.e., Shining Building and Prince Housing go up and down completely randomly.

Pair Corralation between Shining Building and Prince Housing

Assuming the 90 days trading horizon Shining Building Business is expected to generate 1.53 times more return on investment than Prince Housing. However, Shining Building is 1.53 times more volatile than Prince Housing Development. It trades about -0.03 of its potential returns per unit of risk. Prince Housing Development is currently generating about -0.06 per unit of risk. If you would invest  1,220  in Shining Building Business on October 9, 2024 and sell it today you would lose (205.00) from holding Shining Building Business or give up 16.8% of portfolio value over 90 days.

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

Shining Building Business  vs.  Prince Housing Development

Shining Building Business

Risk-Adjusted Performance

0 of 100

Very Weak

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

Prince Housing Devel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shining Building and Prince Housing

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

The idea behind Shining Building Business and Prince Housing Development 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 Commodity Directory module to find actively traded commodities issued by global exchanges.