Correlation Between Chinese Maritime and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and ABC Taiwan 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 Chinese Maritime and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chinese Maritime Transport and ABC Taiwan Electronics, you can compare the effects of market volatilities on Chinese Maritime and ABC Taiwan 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 Chinese Maritime with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and ABC Taiwan.
Diversification Opportunities for Chinese Maritime and ABC Taiwan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chinese and ABC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and ABC Taiwan go up and down completely randomly.
Pair Corralation between Chinese Maritime and ABC Taiwan
Assuming the 90 days trading horizon Chinese Maritime Transport is expected to generate 0.64 times more return on investment than ABC Taiwan. However, Chinese Maritime Transport is 1.56 times less risky than ABC Taiwan. It trades about 0.06 of its potential returns per unit of risk. ABC Taiwan Electronics is currently generating about -0.14 per unit of risk. If you would invest 3,990 in Chinese Maritime Transport on October 21, 2024 and sell it today you would earn a total of 50.00 from holding Chinese Maritime Transport or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chinese Maritime Transport vs. ABC Taiwan Electronics
Performance |
| Timeline |
| Chinese Maritime Tra |
| ABC Taiwan Electronics |
Chinese Maritime and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chinese Maritime and ABC Taiwan
The main advantage of trading using opposite Chinese Maritime and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Maritime position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's long position.| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development Co |
| ABC Taiwan vs. Phytohealth Corp | ABC Taiwan vs. ADLINK Technology | ABC Taiwan vs. Chinese Maritime Transport | ABC Taiwan vs. Posiflex Technology |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |