Correlation Between Virtu Financial and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both Virtu Financial and Chongqing Machinery 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 Virtu Financial and Chongqing Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtu Financial and Chongqing Machinery Electric, you can compare the effects of market volatilities on Virtu Financial and Chongqing Machinery 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 Virtu Financial with a short position of Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtu Financial and Chongqing Machinery.
Diversification Opportunities for Virtu Financial and Chongqing Machinery
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virtu and Chongqing is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Virtu Financial and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery and Virtu Financial 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 Virtu Financial are associated (or correlated) with Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of Virtu Financial i.e., Virtu Financial and Chongqing Machinery go up and down completely randomly.
Pair Corralation between Virtu Financial and Chongqing Machinery
Assuming the 90 days horizon Virtu Financial is expected to generate 2.35 times less return on investment than Chongqing Machinery. But when comparing it to its historical volatility, Virtu Financial is 2.92 times less risky than Chongqing Machinery. It trades about 0.08 of its potential returns per unit of risk. Chongqing Machinery Electric is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.39 in Chongqing Machinery Electric on October 20, 2024 and sell it today you would earn a total of 6.01 from holding Chongqing Machinery Electric or generate 251.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtu Financial vs. Chongqing Machinery Electric
Performance |
| Timeline |
| Virtu Financial |
| Chongqing Machinery |
Virtu Financial and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtu Financial and Chongqing Machinery
The main advantage of trading using opposite Virtu Financial and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtu Financial position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| Virtu Financial vs. Ribbon Communications | Virtu Financial vs. Nanjing Panda Electronics | Virtu Financial vs. Electronic Arts | Virtu Financial vs. Chunghwa Telecom Co |
| Chongqing Machinery vs. CVR Medical Corp | Chongqing Machinery vs. Medical Properties Trust | Chongqing Machinery vs. Fortescue Metals Group | Chongqing Machinery vs. Aluminum of |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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