Correlation Between China Development and Castles Technology
Can any of the company-specific risk be diversified away by investing in both China Development and Castles Technology 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 Development and Castles Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Financial and Castles Technology Co, you can compare the effects of market volatilities on China Development and Castles Technology 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 Development with a short position of Castles Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and Castles Technology.
Diversification Opportunities for China Development and Castles Technology
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Castles is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and Castles Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castles Technology and China Development 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 Development Financial are associated (or correlated) with Castles Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castles Technology has no effect on the direction of China Development i.e., China Development and Castles Technology go up and down completely randomly.
Pair Corralation between China Development and Castles Technology
Assuming the 90 days trading horizon China Development is expected to generate 1.45 times less return on investment than Castles Technology. But when comparing it to its historical volatility, China Development Financial is 2.12 times less risky than Castles Technology. It trades about 0.05 of its potential returns per unit of risk. Castles Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,383 in Castles Technology Co on October 13, 2024 and sell it today you would earn a total of 1,707 from holding Castles Technology Co or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
China Development Financial vs. Castles Technology Co
Performance |
| Timeline |
| China Development |
| Castles Technology |
China Development and Castles Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and Castles Technology
The main advantage of trading using opposite China Development and Castles Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, Castles Technology 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 Castles Technology will offset losses from the drop in Castles Technology's long position.| China Development vs. Cathay Financial Holding | China Development vs. Mega Financial Holding | China Development vs. CTBC Financial Holding | China Development vs. Fubon Financial Holding |
| Castles Technology vs. AVerMedia Technologies | Castles Technology vs. Min Aik Technology | Castles Technology vs. Jean Co | Castles Technology vs. Uniform Industrial Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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