Correlation Between Construction JSC and Construction

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

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

Diversification Opportunities for Construction JSC and Construction

0.7

Correlation Coefficient

Construction JSC  Construction

Poor diversification

The 3 months correlation between Construction and Construction is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 and Construction And Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction And Inv and Construction JSC 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 Construction JSC No5 are associated (or correlated) with Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction And Inv has no effect on the direction of Construction JSC i.e., Construction JSC and Construction go up and down completely randomly.

Pair Corralation between Construction JSC and Construction

Assuming the 90 days trading horizon Construction JSC is expected to generate 1.08 times less return on investment than Construction. In addition to that, Construction JSC is 1.66 times more volatile than Construction And Investment. It trades about 0.05 of its total potential returns per unit of risk. Construction And Investment is currently generating about 0.08 per unit of volatility. If you would invest  1,830,350  in Construction And Investment on September 29, 2024 and sell it today you would earn a total of  2,219,650  from holding Construction And Investment or generate 121.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	66.33%
Values	Daily Returns

Construction JSC No5  vs.  Construction And Investment

Construction JSC No5

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Construction JSC No5 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction JSC displayed solid returns over the last few months and may actually be approaching a breakup point.

Construction And Inv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Construction And Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Construction JSC and Construction

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

The idea behind Construction JSC No5 and Construction And Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.