Correlation Between Brighton Best and Strong H

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

By analyzing existing cross correlation between Brighton Best International Taiwan and Strong H Machinery, you can compare the effects of market volatilities on Brighton Best and Strong H 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 Brighton Best with a short position of Strong H. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighton Best and Strong H.

Diversification Opportunities for Brighton Best and Strong H

0.46

Correlation Coefficient

Brighton Best  Strong H

Very weak diversification

The 3 months correlation between Brighton and Strong is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brighton Best International Ta and Strong H Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strong H Machinery and Brighton Best 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 Brighton Best International Taiwan are associated (or correlated) with Strong H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strong H Machinery has no effect on the direction of Brighton Best i.e., Brighton Best and Strong H go up and down completely randomly.

Pair Corralation between Brighton Best and Strong H

Assuming the 90 days trading horizon Brighton Best International Taiwan is expected to generate 1.87 times more return on investment than Strong H. However, Brighton Best is 1.87 times more volatile than Strong H Machinery. It trades about 0.11 of its potential returns per unit of risk. Strong H Machinery is currently generating about 0.03 per unit of risk. If you would invest  3,395  in Brighton Best International Taiwan on December 29, 2024 and sell it today you would earn a total of  365.00  from holding Brighton Best International Taiwan or generate 10.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Brighton Best International Ta  vs.  Strong H Machinery

Brighton Best Intern

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brighton Best International Taiwan are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Brighton Best may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Strong H Machinery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Strong H Machinery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Strong H 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 Brighton Best and Strong H

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

The idea behind Brighton Best International Taiwan and Strong H Machinery 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.