Correlation Between Anderson Industrial and China Electric
Can any of the company-specific risk be diversified away by investing in both Anderson Industrial and China Electric 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 Anderson Industrial and China Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anderson Industrial Corp and China Electric Manufacturing, you can compare the effects of market volatilities on Anderson Industrial and China Electric 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 Anderson Industrial with a short position of China Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anderson Industrial and China Electric.
Diversification Opportunities for Anderson Industrial and China Electric
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anderson and China is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Anderson Industrial Corp and China Electric Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Electric Manuf and Anderson Industrial 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 Anderson Industrial Corp are associated (or correlated) with China Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Electric Manuf has no effect on the direction of Anderson Industrial i.e., Anderson Industrial and China Electric go up and down completely randomly.
Pair Corralation between Anderson Industrial and China Electric
Assuming the 90 days trading horizon Anderson Industrial Corp is expected to under-perform the China Electric. In addition to that, Anderson Industrial is 1.42 times more volatile than China Electric Manufacturing. It trades about -0.28 of its total potential returns per unit of risk. China Electric Manufacturing is currently generating about -0.21 per unit of volatility. If you would invest 1,585 in China Electric Manufacturing on October 25, 2024 and sell it today you would lose (90.00) from holding China Electric Manufacturing or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anderson Industrial Corp vs. China Electric Manufacturing
Performance |
| Timeline |
| Anderson Industrial Corp |
| China Electric Manuf |
Anderson Industrial and China Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anderson Industrial and China Electric
The main advantage of trading using opposite Anderson Industrial and China Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anderson Industrial position performs unexpectedly, China Electric 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 Electric will offset losses from the drop in China Electric's long position.| Anderson Industrial vs. Awea Mechantronic Co | Anderson Industrial vs. Lee Chi Enterprises | Anderson Industrial vs. Kaulin Mfg | Anderson Industrial vs. Gordon Auto Body |
| China Electric vs. Hold Key Electric Wire | China Electric vs. Anderson Industrial Corp | China Electric vs. Carnival Industrial Corp | China Electric vs. Lee Chi Enterprises |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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