Correlation Between China Metal and Camellia Metal
Can any of the company-specific risk be diversified away by investing in both China Metal and Camellia Metal 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 Metal and Camellia Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Metal Products and Camellia Metal Co, you can compare the effects of market volatilities on China Metal and Camellia Metal 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 Metal with a short position of Camellia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Camellia Metal.
Diversification Opportunities for China Metal and Camellia Metal
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Camellia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Camellia Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camellia Metal and China Metal 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 Metal Products are associated (or correlated) with Camellia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camellia Metal has no effect on the direction of China Metal i.e., China Metal and Camellia Metal go up and down completely randomly.
Pair Corralation between China Metal and Camellia Metal
Assuming the 90 days trading horizon China Metal Products is expected to generate 1.15 times more return on investment than Camellia Metal. However, China Metal is 1.15 times more volatile than Camellia Metal Co. It trades about 0.32 of its potential returns per unit of risk. Camellia Metal Co is currently generating about 0.11 per unit of risk. If you would invest 3,030 in China Metal Products on November 28, 2024 and sell it today you would earn a total of 220.00 from holding China Metal Products or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Camellia Metal Co
Performance |
| Timeline |
| China Metal Products |
| Camellia Metal |
China Metal and Camellia Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Camellia Metal
The main advantage of trading using opposite China Metal and Camellia Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Camellia Metal 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 Camellia Metal will offset losses from the drop in Camellia Metal's long position.| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
| Camellia Metal vs. China Metal Products | Camellia Metal vs. Hwa Fong Rubber | Camellia Metal vs. Farglory FTZ Investment | Camellia Metal vs. Kenda Rubber Industrial |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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