Correlation Between China Mobile and Eagle Cold
Can any of the company-specific risk be diversified away by investing in both China Mobile and Eagle Cold 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 China Mobile and Eagle Cold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Mobile and Eagle Cold Storage, you can compare the effects of market volatilities on China Mobile and Eagle Cold 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 China Mobile with a short position of Eagle Cold. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and Eagle Cold.
Diversification Opportunities for China Mobile and Eagle Cold
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Eagle is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile and Eagle Cold Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Cold Storage and China Mobile 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 China Mobile are associated (or correlated) with Eagle Cold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Cold Storage has no effect on the direction of China Mobile i.e., China Mobile and Eagle Cold go up and down completely randomly.
Pair Corralation between China Mobile and Eagle Cold
Assuming the 90 days trading horizon China Mobile is expected to generate 1.73 times more return on investment than Eagle Cold. However, China Mobile is 1.73 times more volatile than Eagle Cold Storage. It trades about 0.51 of its potential returns per unit of risk. Eagle Cold Storage is currently generating about 0.07 per unit of risk. If you would invest 1,329 in China Mobile on November 4, 2024 and sell it today you would earn a total of 111.00 from holding China Mobile or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mobile vs. Eagle Cold Storage
Performance |
| Timeline |
| China Mobile |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Eagle Cold Storage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
China Mobile and Eagle Cold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and Eagle Cold
The main advantage of trading using opposite China Mobile and Eagle Cold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, Eagle Cold 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 Eagle Cold will offset losses from the drop in Eagle Cold's long position.The idea behind China Mobile and Eagle Cold Storage 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |