Correlation Between China Electric and Awea Mechantronic
Can any of the company-specific risk be diversified away by investing in both China Electric and Awea Mechantronic 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 Electric and Awea Mechantronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Electric Manufacturing and Awea Mechantronic Co, you can compare the effects of market volatilities on China Electric and Awea Mechantronic 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 Electric with a short position of Awea Mechantronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Electric and Awea Mechantronic.
Diversification Opportunities for China Electric and Awea Mechantronic
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Awea is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Electric Manufacturing and Awea Mechantronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awea Mechantronic and China Electric 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 Electric Manufacturing are associated (or correlated) with Awea Mechantronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awea Mechantronic has no effect on the direction of China Electric i.e., China Electric and Awea Mechantronic go up and down completely randomly.
Pair Corralation between China Electric and Awea Mechantronic
Assuming the 90 days trading horizon China Electric Manufacturing is expected to generate 2.2 times more return on investment than Awea Mechantronic. However, China Electric is 2.2 times more volatile than Awea Mechantronic Co. It trades about 0.1 of its potential returns per unit of risk. Awea Mechantronic Co is currently generating about -0.25 per unit of risk. If you would invest 1,645 in China Electric Manufacturing on September 2, 2024 and sell it today you would earn a total of 90.00 from holding China Electric Manufacturing or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Electric Manufacturing vs. Awea Mechantronic Co
Performance |
| Timeline |
| China Electric Manuf |
| Awea Mechantronic |
China Electric and Awea Mechantronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Electric and Awea Mechantronic
The main advantage of trading using opposite China Electric and Awea Mechantronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Electric position performs unexpectedly, Awea Mechantronic 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 Awea Mechantronic will offset losses from the drop in Awea Mechantronic's long position.| China Electric vs. Hold Key Electric Wire | China Electric vs. Anderson Industrial Corp | China Electric vs. Carnival Industrial Corp | China Electric vs. Lee Chi Enterprises |
| Awea Mechantronic vs. Anderson Industrial Corp | Awea Mechantronic vs. Kaulin Mfg | Awea Mechantronic vs. Roundtop Machinery Industries | Awea Mechantronic vs. Tong Tai Machine Tool |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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