Correlation Between Townsquare Media and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and China BlueChemical 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 Townsquare Media and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and China BlueChemical, you can compare the effects of market volatilities on Townsquare Media and China BlueChemical 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 Townsquare Media with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and China BlueChemical.
Diversification Opportunities for Townsquare Media and China BlueChemical
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Townsquare and China is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and Townsquare Media 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 Townsquare Media are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Townsquare Media i.e., Townsquare Media and China BlueChemical go up and down completely randomly.
Pair Corralation between Townsquare Media and China BlueChemical
Assuming the 90 days horizon Townsquare Media is expected to under-perform the China BlueChemical. But the stock apears to be less risky and, when comparing its historical volatility, Townsquare Media is 1.33 times less risky than China BlueChemical. The stock trades about -0.18 of its potential returns per unit of risk. The China BlueChemical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 25.00 in China BlueChemical on October 14, 2024 and sell it today you would earn a total of 1.00 from holding China BlueChemical or generate 4.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Townsquare Media vs. China BlueChemical
Performance |
Timeline |
Townsquare Media |
China BlueChemical |
Townsquare Media and China BlueChemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Townsquare Media and China BlueChemical
The main advantage of trading using opposite Townsquare Media and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.Townsquare Media vs. EAT WELL INVESTMENT | Townsquare Media vs. Axway Software SA | Townsquare Media vs. Take Two Interactive Software | Townsquare Media vs. Chuangs China Investments |
China BlueChemical vs. Townsquare Media | China BlueChemical vs. GigaMedia | China BlueChemical vs. GALENA MINING LTD | China BlueChemical vs. CNVISION MEDIA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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