Correlation Between Founding Construction and Sweeten Real

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

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

Diversification Opportunities for Founding Construction and Sweeten Real

0.63

Correlation Coefficient

Founding Construction  Sweeten Real

Poor diversification

The 3 months correlation between Founding and Sweeten is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Founding Construction Developm and Sweeten Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweeten Real Estate and Founding 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 Founding Construction Development are associated (or correlated) with Sweeten Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweeten Real Estate has no effect on the direction of Founding Construction i.e., Founding Construction and Sweeten Real go up and down completely randomly.

Pair Corralation between Founding Construction and Sweeten Real

Assuming the 90 days trading horizon Founding Construction Development is expected to under-perform the Sweeten Real. But the stock apears to be less risky and, when comparing its historical volatility, Founding Construction Development is 1.7 times less risky than Sweeten Real. The stock trades about -0.05 of its potential returns per unit of risk. The Sweeten Real Estate is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,380  in Sweeten Real Estate on September 12, 2024 and sell it today you would earn a total of  50.00  from holding Sweeten Real Estate or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Founding Construction Developm  vs.  Sweeten Real Estate

Founding Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Founding Construction Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Founding Construction is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sweeten Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sweeten Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sweeten Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Founding Construction and Sweeten Real

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

The idea behind Founding Construction Development and Sweeten Real Estate 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.