Correlation Between China Development and Andes Technology
Can any of the company-specific risk be diversified away by investing in both China Development and Andes 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 Andes 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 Andes Technology Corp, you can compare the effects of market volatilities on China Development and Andes 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 Andes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and Andes Technology.
Diversification Opportunities for China Development and Andes Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Andes is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and Andes Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andes Technology Corp 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 Andes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andes Technology Corp has no effect on the direction of China Development i.e., China Development and Andes Technology go up and down completely randomly.
Pair Corralation between China Development and Andes Technology
Assuming the 90 days trading horizon China Development Financial is expected to generate 0.52 times more return on investment than Andes Technology. However, China Development Financial is 1.94 times less risky than Andes Technology. It trades about 0.14 of its potential returns per unit of risk. Andes Technology Corp is currently generating about -0.14 per unit of risk. If you would invest 1,690 in China Development Financial on August 28, 2024 and sell it today you would earn a total of 55.00 from holding China Development Financial or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Financial vs. Andes Technology Corp
Performance |
| Timeline |
| China Development |
| Andes Technology Corp |
China Development and Andes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and Andes Technology
The main advantage of trading using opposite China Development and Andes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, Andes 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 Andes Technology will offset losses from the drop in Andes 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 |
| Andes Technology vs. Sheng Yu Steel | Andes Technology vs. Chicony Power Technology | Andes Technology vs. Sunnic Technology Merchandise | Andes Technology 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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