Correlation Between Crowell Development and Chong Hong

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

By analyzing existing cross correlation between Crowell Development Corp and Chong Hong Construction, you can compare the effects of market volatilities on Crowell Development and Chong Hong 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 Crowell Development with a short position of Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crowell Development and Chong Hong.

Diversification Opportunities for Crowell Development and Chong Hong

0.66

Correlation Coefficient

Crowell Development  Chong Hong

Poor diversification

The 3 months correlation between Crowell and Chong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Crowell Development Corp and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction and Crowell Development 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 Crowell Development Corp are associated (or correlated) with Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Crowell Development i.e., Crowell Development and Chong Hong go up and down completely randomly.

Pair Corralation between Crowell Development and Chong Hong

Assuming the 90 days trading horizon Crowell Development Corp is expected to generate 1.09 times more return on investment than Chong Hong. However, Crowell Development is 1.09 times more volatile than Chong Hong Construction. It trades about 0.1 of its potential returns per unit of risk. Chong Hong Construction is currently generating about 0.03 per unit of risk. If you would invest  1,580  in Crowell Development Corp on September 14, 2024 and sell it today you would earn a total of  2,360  from holding Crowell Development Corp or generate 149.37% return on investment over 90 days.

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

Crowell Development Corp  vs.  Chong Hong Construction

Crowell Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crowell Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Chong Hong Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chong Hong Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Crowell Development and Chong Hong

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

The idea behind Crowell Development Corp and Chong Hong Construction 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.