Correlation Between Bird Construction and Pentagon I

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

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

Diversification Opportunities for Bird Construction and Pentagon I

0.17

Correlation Coefficient

Bird Construction  Pentagon I

Average diversification

The 3 months correlation between Bird and Pentagon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bird Construction and Pentagon I Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentagon I Capital and Bird Construction 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 Bird Construction are associated (or correlated) with Pentagon I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentagon I Capital has no effect on the direction of Bird Construction i.e., Bird Construction and Pentagon I go up and down completely randomly.

Pair Corralation between Bird Construction and Pentagon I

Assuming the 90 days trading horizon Bird Construction is expected to generate 0.27 times more return on investment than Pentagon I. However, Bird Construction is 3.72 times less risky than Pentagon I. It trades about 0.12 of its potential returns per unit of risk. Pentagon I Capital is currently generating about 0.01 per unit of risk. If you would invest  826.00  in Bird Construction on September 25, 2024 and sell it today you would earn a total of  1,791  from holding Bird Construction or generate 216.83% return on investment over 90 days.

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

Bird Construction  vs.  Pentagon I Capital

Bird Construction

Risk-Adjusted Performance

7 of 100

OK

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

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bird Construction and Pentagon I

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

The idea behind Bird Construction and Pentagon I Capital 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.