Correlation Between Westgold Resources and China Communications
Can any of the company-specific risk be diversified away by investing in both Westgold Resources and China Communications 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 Westgold Resources and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westgold Resources and China Communications Services, you can compare the effects of market volatilities on Westgold Resources and China Communications 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 Westgold Resources with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westgold Resources and China Communications.
Diversification Opportunities for Westgold Resources and China Communications
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westgold and China is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Westgold Resources and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and Westgold Resources 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 Westgold Resources are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Westgold Resources i.e., Westgold Resources and China Communications go up and down completely randomly.
Pair Corralation between Westgold Resources and China Communications
Assuming the 90 days horizon Westgold Resources is expected to generate 31.18 times less return on investment than China Communications. In addition to that, Westgold Resources is 1.9 times more volatile than China Communications Services. It trades about 0.0 of its total potential returns per unit of risk. China Communications Services is currently generating about 0.09 per unit of volatility. If you would invest 43.00 in China Communications Services on November 3, 2024 and sell it today you would earn a total of 10.00 from holding China Communications Services or generate 23.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westgold Resources vs. China Communications Services
Performance |
| Timeline |
| Westgold Resources |
| China Communications |
Westgold Resources and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westgold Resources and China Communications
The main advantage of trading using opposite Westgold Resources and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westgold Resources position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| Westgold Resources vs. PLAYTECH | Westgold Resources vs. Federal Agricultural Mortgage | Westgold Resources vs. North American Construction | Westgold Resources vs. ePlay Digital |
| China Communications vs. GALENA MINING LTD | China Communications vs. Highlight Communications AG | China Communications vs. Verizon Communications | China Communications vs. ecotel communication ag |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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