Correlation Between AUTO TRADER and China Coal
Can any of the company-specific risk be diversified away by investing in both AUTO TRADER and China Coal 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 AUTO TRADER and China Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUTO TRADER ADR and China Coal Energy, you can compare the effects of market volatilities on AUTO TRADER and China Coal 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 AUTO TRADER with a short position of China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and China Coal.
Diversification Opportunities for AUTO TRADER and China Coal
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between AUTO and China is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy and AUTO TRADER 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 AUTO TRADER ADR are associated (or correlated) with China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of AUTO TRADER i.e., AUTO TRADER and China Coal go up and down completely randomly.
Pair Corralation between AUTO TRADER and China Coal
Assuming the 90 days trading horizon AUTO TRADER is expected to generate 44.72 times less return on investment than China Coal. But when comparing it to its historical volatility, AUTO TRADER ADR is 3.31 times less risky than China Coal. It trades about 0.01 of its potential returns per unit of risk. China Coal Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 83.00 in China Coal Energy on September 2, 2024 and sell it today you would earn a total of 27.00 from holding China Coal Energy or generate 32.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUTO TRADER ADR vs. China Coal Energy
Performance |
| Timeline |
| AUTO TRADER ADR |
| China Coal Energy |
AUTO TRADER and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUTO TRADER and China Coal
The main advantage of trading using opposite AUTO TRADER and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTO TRADER position performs unexpectedly, China Coal 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 Coal will offset losses from the drop in China Coal's long position.| AUTO TRADER vs. SERI INDUSTRIAL EO | AUTO TRADER vs. Evolution Mining Limited | AUTO TRADER vs. Corporate Travel Management | AUTO TRADER vs. ADRIATIC METALS LS 013355 |
| China Coal vs. Tradeweb Markets | China Coal vs. AUTO TRADER ADR | China Coal vs. Infrastrutture Wireless Italiane | China Coal vs. SALESFORCE INC CDR |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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