Correlation Between China Electric and Everlight Chemical
Can any of the company-specific risk be diversified away by investing in both China Electric and Everlight Chemical 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 Everlight Chemical 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 Everlight Chemical Industrial, you can compare the effects of market volatilities on China Electric and Everlight Chemical 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 Everlight Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Electric and Everlight Chemical.
Diversification Opportunities for China Electric and Everlight Chemical
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Everlight is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding China Electric Manufacturing and Everlight Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Chemical 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 Everlight Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Chemical has no effect on the direction of China Electric i.e., China Electric and Everlight Chemical go up and down completely randomly.
Pair Corralation between China Electric and Everlight Chemical
Assuming the 90 days trading horizon China Electric Manufacturing is expected to generate 1.67 times more return on investment than Everlight Chemical. However, China Electric is 1.67 times more volatile than Everlight Chemical Industrial. It trades about 0.1 of its potential returns per unit of risk. Everlight Chemical Industrial is currently generating about -0.19 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Electric Manufacturing vs. Everlight Chemical Industrial
Performance |
| Timeline |
| China Electric Manuf |
| Everlight Chemical |
China Electric and Everlight Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Electric and Everlight Chemical
The main advantage of trading using opposite China Electric and Everlight Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Electric position performs unexpectedly, Everlight Chemical 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 Everlight Chemical will offset losses from the drop in Everlight Chemical'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 |
| Everlight Chemical vs. Oriental Union Chemical | Everlight Chemical vs. Ho Tung Chemical | Everlight Chemical vs. China Man Made Fiber | Everlight Chemical vs. Sunko Ink 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |