Correlation Between Consolidated Construction and WESTLIFE FOODWORLD

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

By analyzing existing cross correlation between Consolidated Construction Consortium and WESTLIFE FOODWORLD LIMITED, you can compare the effects of market volatilities on Consolidated Construction and WESTLIFE FOODWORLD 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 Consolidated Construction with a short position of WESTLIFE FOODWORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and WESTLIFE FOODWORLD.

Diversification Opportunities for Consolidated Construction and WESTLIFE FOODWORLD

0.74

Correlation Coefficient

Consolidated Construction  WESTLIFE FOODWORLD

Poor diversification

The 3 months correlation between Consolidated and WESTLIFE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and WESTLIFE FOODWORLD LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLIFE FOODWORLD and Consolidated 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 Consolidated Construction Consortium are associated (or correlated) with WESTLIFE FOODWORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLIFE FOODWORLD has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and WESTLIFE FOODWORLD go up and down completely randomly.

Pair Corralation between Consolidated Construction and WESTLIFE FOODWORLD

Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 15.69 times more return on investment than WESTLIFE FOODWORLD. However, Consolidated Construction is 15.69 times more volatile than WESTLIFE FOODWORLD LIMITED. It trades about 0.05 of its potential returns per unit of risk. WESTLIFE FOODWORLD LIMITED is currently generating about 0.03 per unit of risk. If you would invest  145.00  in Consolidated Construction Consortium on October 11, 2024 and sell it today you would earn a total of  1,693  from holding Consolidated Construction Consortium or generate 1167.59% return on investment over 90 days.

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

Consolidated Construction Cons  vs.  WESTLIFE FOODWORLD LIMITED

Consolidated Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Construction Consortium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

WESTLIFE FOODWORLD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTLIFE FOODWORLD LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, WESTLIFE FOODWORLD is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Consolidated Construction and WESTLIFE FOODWORLD

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

The idea behind Consolidated Construction Consortium and WESTLIFE FOODWORLD LIMITED 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.