Correlation Between China Man and Ritek Corp
Can any of the company-specific risk be diversified away by investing in both China Man and Ritek Corp 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 Man and Ritek Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Man Made Fiber and Ritek Corp, you can compare the effects of market volatilities on China Man and Ritek Corp 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 Man with a short position of Ritek Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Man and Ritek Corp.
Diversification Opportunities for China Man and Ritek Corp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Ritek is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding China Man Made Fiber and Ritek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ritek Corp and China Man 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 Man Made Fiber are associated (or correlated) with Ritek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ritek Corp has no effect on the direction of China Man i.e., China Man and Ritek Corp go up and down completely randomly.
Pair Corralation between China Man and Ritek Corp
Assuming the 90 days trading horizon China Man Made Fiber is expected to under-perform the Ritek Corp. But the stock apears to be less risky and, when comparing its historical volatility, China Man Made Fiber is 2.25 times less risky than Ritek Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Ritek Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 876.00 in Ritek Corp on November 27, 2024 and sell it today you would earn a total of 479.00 from holding Ritek Corp or generate 54.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Man Made Fiber vs. Ritek Corp
Performance |
| Timeline |
| China Man Made |
| Ritek Corp |
China Man and Ritek Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Man and Ritek Corp
The main advantage of trading using opposite China Man and Ritek Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Man position performs unexpectedly, Ritek Corp 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 Ritek Corp will offset losses from the drop in Ritek Corp's long position.| China Man vs. Oriental Union Chemical | China Man vs. China Petrochemical Development | China Man vs. Taiwan Styrene Monomer | China Man vs. Grand Pacific Petrochemical |
| Ritek Corp vs. CMC Magnetics Corp | Ritek Corp vs. VIA Technologies | Ritek Corp vs. Winbond Electronics Corp | Ritek Corp vs. Macronix International 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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