Correlation Between Century Wind and BenQ Materials
Can any of the company-specific risk be diversified away by investing in both Century Wind and BenQ Materials 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 Century Wind and BenQ Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and BenQ Materials Corp, you can compare the effects of market volatilities on Century Wind and BenQ Materials 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 Century Wind with a short position of BenQ Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and BenQ Materials.
Diversification Opportunities for Century Wind and BenQ Materials
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Century and BenQ is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and BenQ Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Materials Corp and Century Wind 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 Century Wind Power are associated (or correlated) with BenQ Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Materials Corp has no effect on the direction of Century Wind i.e., Century Wind and BenQ Materials go up and down completely randomly.
Pair Corralation between Century Wind and BenQ Materials
Assuming the 90 days trading horizon Century Wind Power is expected to generate 1.66 times more return on investment than BenQ Materials. However, Century Wind is 1.66 times more volatile than BenQ Materials Corp. It trades about 0.04 of its potential returns per unit of risk. BenQ Materials Corp is currently generating about -0.02 per unit of risk. If you would invest 24,926 in Century Wind Power on September 24, 2024 and sell it today you would earn a total of 5,024 from holding Century Wind Power or generate 20.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Century Wind Power vs. BenQ Materials Corp
Performance |
Timeline |
Century Wind Power |
BenQ Materials Corp |
Century Wind and BenQ Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Century Wind and BenQ Materials
The main advantage of trading using opposite Century Wind and BenQ Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, BenQ Materials 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 BenQ Materials will offset losses from the drop in BenQ Materials' long position.Century Wind vs. Ruentex Development Co | Century Wind vs. United Integrated Services | Century Wind vs. CTCI Corp | Century Wind vs. Continental Holdings Corp |
BenQ Materials vs. Century Wind Power | BenQ Materials vs. Green World Fintech | BenQ Materials vs. Ingentec | BenQ Materials vs. Chaheng Precision Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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