Correlation Between China Metal and CKM Building
Can any of the company-specific risk be diversified away by investing in both China Metal and CKM Building 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 CKM Building 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 CKM Building Material, you can compare the effects of market volatilities on China Metal and CKM Building 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 CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and CKM Building.
Diversification Opportunities for China Metal and CKM Building
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and CKM is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material 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 CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of China Metal i.e., China Metal and CKM Building go up and down completely randomly.
Pair Corralation between China Metal and CKM Building
Assuming the 90 days trading horizon China Metal is expected to generate 19.07 times less return on investment than CKM Building. But when comparing it to its historical volatility, China Metal Products is 1.31 times less risky than CKM Building. It trades about 0.01 of its potential returns per unit of risk. CKM Building Material is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,532 in CKM Building Material on October 25, 2024 and sell it today you would earn a total of 2,063 from holding CKM Building Material or generate 134.66% 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. CKM Building Material
Performance |
| Timeline |
| China Metal Products |
| CKM Building Material |
China Metal and CKM Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and CKM Building
The main advantage of trading using opposite China Metal and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building'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 |
| CKM Building vs. SuperAlloy Industrial Co, | CKM Building vs. Hi Lai Foods Co | CKM Building vs. Chung Hwa Food | CKM Building vs. Tigerair Taiwan Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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