Correlation Between Investment and Construction JSC

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

By analyzing existing cross correlation between Investment And Construction and Construction JSC No5, you can compare the effects of market volatilities on Investment and Construction JSC 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 Investment with a short position of Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Construction JSC.

Diversification Opportunities for Investment and Construction JSC

-0.35

Correlation Coefficient

Investment  Construction JSC

Very good diversification

The 3 months correlation between Investment and Construction is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Investment And Construction and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 and Investment 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 Investment And Construction are associated (or correlated) with Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of Investment i.e., Investment and Construction JSC go up and down completely randomly.

Pair Corralation between Investment and Construction JSC

Assuming the 90 days trading horizon Investment And Construction is expected to generate 1.42 times more return on investment than Construction JSC. However, Investment is 1.42 times more volatile than Construction JSC No5. It trades about 0.06 of its potential returns per unit of risk. Construction JSC No5 is currently generating about 0.01 per unit of risk. If you would invest  400,000  in Investment And Construction on October 25, 2024 and sell it today you would earn a total of  530,000  from holding Investment And Construction or generate 132.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.51%
Values	Daily Returns

Investment And Construction  vs.  Construction JSC No5

Investment And Const

Risk-Adjusted Performance

0 of 100

Very Weak

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

Construction JSC No5

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Construction JSC No5 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Construction JSC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Investment and Construction JSC

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

The idea behind Investment And Construction and Construction JSC No5 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.