Correlation Between Champion Building and China Man
Can any of the company-specific risk be diversified away by investing in both Champion Building and China Man 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 Champion Building and China Man into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Building Materials and China Man Made Fiber, you can compare the effects of market volatilities on Champion Building and China Man 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 Champion Building with a short position of China Man. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Building and China Man.
Diversification Opportunities for Champion Building and China Man
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Champion and China is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Champion Building Materials and China Man Made Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Man Made and Champion Building 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 Champion Building Materials are associated (or correlated) with China Man. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Man Made has no effect on the direction of Champion Building i.e., Champion Building and China Man go up and down completely randomly.
Pair Corralation between Champion Building and China Man
Assuming the 90 days trading horizon Champion Building is expected to generate 23.04 times less return on investment than China Man. In addition to that, Champion Building is 1.36 times more volatile than China Man Made Fiber. It trades about 0.01 of its total potential returns per unit of risk. China Man Made Fiber is currently generating about 0.22 per unit of volatility. If you would invest 777.00 in China Man Made Fiber on September 4, 2024 and sell it today you would earn a total of 41.00 from holding China Man Made Fiber or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Building Materials vs. China Man Made Fiber
Performance |
| Timeline |
| Champion Building |
| China Man Made |
Champion Building and China Man Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Building and China Man
The main advantage of trading using opposite Champion Building and China Man positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Building position performs unexpectedly, China Man 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 China Man will offset losses from the drop in China Man's long position.| Champion Building vs. Universal Microelectronics Co | Champion Building vs. AVerMedia Technologies | Champion Building vs. Symtek Automation Asia | Champion Building vs. WiseChip Semiconductor |
| China Man vs. Oriental Union Chemical | China Man vs. China Petrochemical Development | China Man vs. Taiwan Styrene Monomer | China Man vs. Grand Pacific Petrochemical |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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