Correlation Between Shiny Chemical and International CSRC
Can any of the company-specific risk be diversified away by investing in both Shiny Chemical and International CSRC 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 Shiny Chemical and International CSRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shiny Chemical Industrial and International CSRC Investment, you can compare the effects of market volatilities on Shiny Chemical and International CSRC 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 Shiny Chemical with a short position of International CSRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and International CSRC.
Diversification Opportunities for Shiny Chemical and International CSRC
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shiny and International is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and International CSRC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International CSRC and Shiny Chemical 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 Shiny Chemical Industrial are associated (or correlated) with International CSRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International CSRC has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and International CSRC go up and down completely randomly.
Pair Corralation between Shiny Chemical and International CSRC
Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to under-perform the International CSRC. In addition to that, Shiny Chemical is 1.73 times more volatile than International CSRC Investment. It trades about -0.17 of its total potential returns per unit of risk. International CSRC Investment is currently generating about 0.08 per unit of volatility. If you would invest 1,525 in International CSRC Investment on August 26, 2024 and sell it today you would earn a total of 25.00 from holding International CSRC Investment or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiny Chemical Industrial vs. International CSRC Investment
Performance |
| Timeline |
| Shiny Chemical Industrial |
| International CSRC |
Shiny Chemical and International CSRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiny Chemical and International CSRC
The main advantage of trading using opposite Shiny Chemical and International CSRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiny Chemical position performs unexpectedly, International CSRC 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 International CSRC will offset losses from the drop in International CSRC's long position.| Shiny Chemical vs. Cheng Shin Rubber | Shiny Chemical vs. Taiwan Cement Corp | Shiny Chemical vs. China Steel Chemical | Shiny Chemical vs. Yulon Motor Co |
| International CSRC vs. Cheng Shin Rubber | International CSRC vs. Taiwan Cement Corp | International CSRC vs. China Steel Chemical | International CSRC vs. Yulon Motor 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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