Correlation Between China Metal and Catcher Technology
Can any of the company-specific risk be diversified away by investing in both China Metal and Catcher Technology 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 Catcher Technology 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 Catcher Technology Co, you can compare the effects of market volatilities on China Metal and Catcher Technology 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 Catcher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Catcher Technology.
Diversification Opportunities for China Metal and Catcher Technology
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Catcher is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Catcher Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catcher Technology 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 Catcher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catcher Technology has no effect on the direction of China Metal i.e., China Metal and Catcher Technology go up and down completely randomly.
Pair Corralation between China Metal and Catcher Technology
Assuming the 90 days trading horizon China Metal Products is expected to generate 1.23 times more return on investment than Catcher Technology. However, China Metal is 1.23 times more volatile than Catcher Technology Co. It trades about 0.02 of its potential returns per unit of risk. Catcher Technology Co is currently generating about 0.02 per unit of risk. If you would invest 3,030 in China Metal Products on August 27, 2024 and sell it today you would earn a total of 360.00 from holding China Metal Products or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Catcher Technology Co
Performance |
| Timeline |
| China Metal Products |
| Catcher Technology |
China Metal and Catcher Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Catcher Technology
The main advantage of trading using opposite China Metal and Catcher Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Catcher Technology 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 Catcher Technology will offset losses from the drop in Catcher Technology'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 |
| Catcher Technology vs. Novatek Microelectronics Corp | Catcher Technology vs. Quanta Computer | Catcher Technology vs. United Microelectronics |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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