Correlation Between Bigbloc Construction and 21st Century

Can any of the company-specific risk be diversified away by investing in both Bigbloc Construction and 21st Century 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 Bigbloc Construction and 21st Century into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bigbloc Construction Limited and 21st Century Management, you can compare the effects of market volatilities on Bigbloc Construction and 21st Century 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 Bigbloc Construction with a short position of 21st Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bigbloc Construction and 21st Century.

Diversification Opportunities for Bigbloc Construction and 21st Century

0.96

Correlation Coefficient

Bigbloc Construction  21st Century

Almost no diversification

The 3 months correlation between Bigbloc and 21st is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Bigbloc Construction Limited and 21st Century Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21st Century Management and Bigbloc 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 Bigbloc Construction Limited are associated (or correlated) with 21st Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21st Century Management has no effect on the direction of Bigbloc Construction i.e., Bigbloc Construction and 21st Century go up and down completely randomly.

Pair Corralation between Bigbloc Construction and 21st Century

Assuming the 90 days trading horizon Bigbloc Construction Limited is expected to under-perform the 21st Century. In addition to that, Bigbloc Construction is 2.08 times more volatile than 21st Century Management. It trades about -0.25 of its total potential returns per unit of risk. 21st Century Management is currently generating about -0.27 per unit of volatility. If you would invest  9,359  in 21st Century Management on December 1, 2024 and sell it today you would lose (2,218) from holding 21st Century Management or give up 23.7% of portfolio value over 90 days.

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

Bigbloc Construction Limited  vs.  21st Century Management

Bigbloc Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bigbloc Construction Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

21st Century Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21st Century Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bigbloc Construction and 21st Century

The main advantage of trading using opposite Bigbloc Construction and 21st Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bigbloc Construction position performs unexpectedly, 21st Century 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 21st Century will offset losses from the drop in 21st Century's long position.

The idea behind Bigbloc Construction Limited and 21st Century Management 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.