Correlation Between TRAINLINE PLC and CHINA OIL
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and CHINA OIL 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 TRAINLINE PLC and CHINA OIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and CHINA OIL AND, you can compare the effects of market volatilities on TRAINLINE PLC and CHINA OIL 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 TRAINLINE PLC with a short position of CHINA OIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and CHINA OIL.
Diversification Opportunities for TRAINLINE PLC and CHINA OIL
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRAINLINE and CHINA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and CHINA OIL AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA OIL AND and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with CHINA OIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA OIL AND has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and CHINA OIL go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and CHINA OIL
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 1.51 times more return on investment than CHINA OIL. However, TRAINLINE PLC is 1.51 times more volatile than CHINA OIL AND. It trades about 0.04 of its potential returns per unit of risk. CHINA OIL AND is currently generating about -0.04 per unit of risk. If you would invest 342.00 in TRAINLINE PLC LS on September 2, 2024 and sell it today you would earn a total of 142.00 from holding TRAINLINE PLC LS or generate 41.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. CHINA OIL AND
Performance |
| Timeline |
| TRAINLINE PLC LS |
| CHINA OIL AND |
TRAINLINE PLC and CHINA OIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and CHINA OIL
The main advantage of trading using opposite TRAINLINE PLC and CHINA OIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, CHINA OIL 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 OIL will offset losses from the drop in CHINA OIL's long position.| TRAINLINE PLC vs. Ramsay Health Care | TRAINLINE PLC vs. North American Construction | TRAINLINE PLC vs. Granite Construction | TRAINLINE PLC vs. Titan Machinery |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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