Correlation Between Louisa Professional and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Louisa Professional 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 Louisa Professional and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Louisa Professional Coffee and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Louisa Professional 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 Louisa Professional with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Louisa Professional and CHINA DEVELOPMENT.
Diversification Opportunities for Louisa Professional and CHINA DEVELOPMENT
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Louisa and CHINA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Louisa Professional Coffee and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Louisa Professional 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 Louisa Professional Coffee 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 Louisa Professional i.e., Louisa Professional and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Louisa Professional and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Louisa Professional Coffee is expected to under-perform the CHINA DEVELOPMENT. In addition to that, Louisa Professional is 1.65 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about -0.34 of its total potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.17 per unit of volatility. If you would invest 758.00 in CHINA DEVELOPMENT FINANCIAL on August 30, 2024 and sell it today you would earn a total of 20.00 from holding CHINA DEVELOPMENT FINANCIAL or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Louisa Professional Coffee vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Louisa Professional |
| CHINA DEVELOPMENT |
Louisa Professional and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Louisa Professional and CHINA DEVELOPMENT
The main advantage of trading using opposite Louisa Professional and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Louisa Professional 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.| Louisa Professional vs. Wowprime Corp | Louisa Professional vs. An Shin Food Services | Louisa Professional vs. New Palace International |
| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. CTBC Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Top |
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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