Correlation Between China Bills and Concord Securities
Can any of the company-specific risk be diversified away by investing in both China Bills and Concord Securities 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 China Bills and Concord Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Bills Finance and Concord Securities Co, you can compare the effects of market volatilities on China Bills and Concord Securities 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 China Bills with a short position of Concord Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Bills and Concord Securities.
Diversification Opportunities for China Bills and Concord Securities
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Concord is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Bills Finance and Concord Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Securities and China Bills 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 China Bills Finance are associated (or correlated) with Concord Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Securities has no effect on the direction of China Bills i.e., China Bills and Concord Securities go up and down completely randomly.
Pair Corralation between China Bills and Concord Securities
Assuming the 90 days trading horizon China Bills Finance is expected to generate 0.52 times more return on investment than Concord Securities. However, China Bills Finance is 1.93 times less risky than Concord Securities. It trades about 0.13 of its potential returns per unit of risk. Concord Securities Co is currently generating about 0.0 per unit of risk. If you would invest 1,490 in China Bills Finance on August 26, 2024 and sell it today you would earn a total of 15.00 from holding China Bills Finance or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Bills Finance vs. Concord Securities Co
Performance |
| Timeline |
| China Bills Finance |
| Concord Securities |
China Bills and Concord Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Bills and Concord Securities
The main advantage of trading using opposite China Bills and Concord Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Bills position performs unexpectedly, Concord Securities 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 Concord Securities will offset losses from the drop in Concord Securities' long position.| China Bills vs. Chang Hwa Commercial | China Bills vs. IBF Financial Holdings | China Bills vs. Taiwan Business Bank | China Bills vs. Yuanta Financial Holdings |
| Concord Securities vs. Hung Sheng Construction | Concord Securities vs. Mercuries Life Insurance | Concord Securities vs. Sinher Technology | Concord Securities vs. YungShin Global Holding |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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