Correlation Between Mechanics Construction and Century Synthetic

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

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

Diversification Opportunities for Mechanics Construction and Century Synthetic

0.57

Correlation Coefficient

Mechanics Construction  Century Synthetic

Very weak diversification

The 3 months correlation between Mechanics and Century is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mechanics Construction and and Century Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Synthetic Fiber and Mechanics 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 Mechanics Construction and are associated (or correlated) with Century Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Synthetic Fiber has no effect on the direction of Mechanics Construction i.e., Mechanics Construction and Century Synthetic go up and down completely randomly.

Pair Corralation between Mechanics Construction and Century Synthetic

Assuming the 90 days trading horizon Mechanics Construction and is expected to generate 0.63 times more return on investment than Century Synthetic. However, Mechanics Construction and is 1.57 times less risky than Century Synthetic. It trades about -0.01 of its potential returns per unit of risk. Century Synthetic Fiber is currently generating about -0.05 per unit of risk. If you would invest  910,714  in Mechanics Construction and on October 9, 2024 and sell it today you would lose (40,714) from holding Mechanics Construction and or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.56%
Values	Daily Returns

Mechanics Construction and  vs.  Century Synthetic Fiber

Mechanics Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mechanics Construction and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Mechanics Construction is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Century Synthetic Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Synthetic Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Century Synthetic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mechanics Construction and Century Synthetic

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

The idea behind Mechanics Construction and and Century Synthetic Fiber 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.