Correlation Between China Metal and Azion
Can any of the company-specific risk be diversified away by investing in both China Metal and Azion 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 Azion 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 Azion, you can compare the effects of market volatilities on China Metal and Azion 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 Azion. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Azion.
Diversification Opportunities for China Metal and Azion
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Azion is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Azion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azion 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 Azion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azion has no effect on the direction of China Metal i.e., China Metal and Azion go up and down completely randomly.
Pair Corralation between China Metal and Azion
Assuming the 90 days trading horizon China Metal is expected to generate 4.96 times less return on investment than Azion. But when comparing it to its historical volatility, China Metal Products is 2.02 times less risky than Azion. It trades about 0.03 of its potential returns per unit of risk. Azion is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,220 in Azion on September 12, 2024 and sell it today you would earn a total of 1,465 from holding Azion or generate 120.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Azion
Performance |
| Timeline |
| China Metal Products |
| Azion |
China Metal and Azion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Azion
The main advantage of trading using opposite China Metal and Azion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Azion 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 Azion will offset losses from the drop in Azion's long position.| China Metal vs. Tainan Spinning Co | China Metal vs. Lealea Enterprise Co | China Metal vs. China Petrochemical Development | China Metal vs. Ruentex Development Co |
| Azion vs. Thermaltake Technology Co | Azion vs. Sunspring Metal Corp | Azion vs. Golden Biotechnology | Azion vs. Apex Biotechnology Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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