Correlation Between Camellia Metal and China Development
Can any of the company-specific risk be diversified away by investing in both Camellia Metal and China Development 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 Camellia Metal and China Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camellia Metal Co and China Development Financial, you can compare the effects of market volatilities on Camellia Metal and China Development 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 Camellia Metal with a short position of China Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camellia Metal and China Development.
Diversification Opportunities for Camellia Metal and China Development
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Camellia and China is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Camellia Metal Co and China Development Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Development and Camellia Metal 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 Camellia Metal Co are associated (or correlated) with China Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Development has no effect on the direction of Camellia Metal i.e., Camellia Metal and China Development go up and down completely randomly.
Pair Corralation between Camellia Metal and China Development
Assuming the 90 days trading horizon Camellia Metal Co is expected to under-perform the China Development. But the stock apears to be less risky and, when comparing its historical volatility, Camellia Metal Co is 1.35 times less risky than China Development. The stock trades about -0.25 of its potential returns per unit of risk. The China Development Financial is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 1,855 in China Development Financial on January 22, 2025 and sell it today you would lose (290.00) from holding China Development Financial or give up 15.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Camellia Metal Co vs. China Development Financial
Performance |
| Timeline |
| Camellia Metal |
| China Development |
Camellia Metal and China Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Camellia Metal and China Development
The main advantage of trading using opposite Camellia Metal and China Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camellia Metal position performs unexpectedly, China Development 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 Development will offset losses from the drop in China Development's long position.| Camellia Metal vs. Catcher Technology Co | Camellia Metal vs. Solar Applied Materials | Camellia Metal vs. Evergreen Steel Corp | Camellia Metal vs. Shin Zu Shing |
| China Development vs. Central Reinsurance Corp | China Development vs. Huaku Development Co | China Development vs. Fubon Financial Holding | China Development vs. Chailease Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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