Correlation Between China Ecotek and Asia Cement
Can any of the company-specific risk be diversified away by investing in both China Ecotek and Asia Cement 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 Ecotek and Asia Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Ecotek Corp and Asia Cement Corp, you can compare the effects of market volatilities on China Ecotek and Asia Cement 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 Ecotek with a short position of Asia Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Ecotek and Asia Cement.
Diversification Opportunities for China Ecotek and Asia Cement
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Asia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding China Ecotek Corp and Asia Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Cement Corp and China Ecotek 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 Ecotek Corp are associated (or correlated) with Asia Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Cement Corp has no effect on the direction of China Ecotek i.e., China Ecotek and Asia Cement go up and down completely randomly.
Pair Corralation between China Ecotek and Asia Cement
Assuming the 90 days trading horizon China Ecotek Corp is expected to generate 0.8 times more return on investment than Asia Cement. However, China Ecotek Corp is 1.25 times less risky than Asia Cement. It trades about 0.12 of its potential returns per unit of risk. Asia Cement Corp is currently generating about -0.27 per unit of risk. If you would invest 6,090 in China Ecotek Corp on September 13, 2024 and sell it today you would earn a total of 160.00 from holding China Ecotek Corp or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Ecotek Corp vs. Asia Cement Corp
Performance |
| Timeline |
| China Ecotek Corp |
| Asia Cement Corp |
China Ecotek and Asia Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Ecotek and Asia Cement
The main advantage of trading using opposite China Ecotek and Asia Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Ecotek position performs unexpectedly, Asia Cement 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 Asia Cement will offset losses from the drop in Asia Cement's long position.| China Ecotek vs. CHC Resources Corp | China Ecotek vs. China Steel Chemical | China Ecotek vs. TTET Union Corp | China Ecotek vs. Standard Foods Corp |
| Asia Cement vs. Tainan Spinning Co | Asia Cement vs. Lealea Enterprise Co | Asia Cement vs. China Petrochemical Development | Asia Cement vs. Ruentex Development 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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