Correlation Between Masterwork Machinery and China Galaxy
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By analyzing existing cross correlation between Masterwork Machinery and China Galaxy Securities, you can compare the effects of market volatilities on Masterwork Machinery and China Galaxy 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 Masterwork Machinery with a short position of China Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masterwork Machinery and China Galaxy.
Diversification Opportunities for Masterwork Machinery and China Galaxy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Masterwork and China is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Masterwork Machinery and China Galaxy Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Galaxy Securities and Masterwork Machinery 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 Masterwork Machinery are associated (or correlated) with China Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Galaxy Securities has no effect on the direction of Masterwork Machinery i.e., Masterwork Machinery and China Galaxy go up and down completely randomly.
Pair Corralation between Masterwork Machinery and China Galaxy
Assuming the 90 days trading horizon Masterwork Machinery is expected to under-perform the China Galaxy. In addition to that, Masterwork Machinery is 1.46 times more volatile than China Galaxy Securities. It trades about -0.22 of its total potential returns per unit of risk. China Galaxy Securities is currently generating about -0.18 per unit of volatility. If you would invest 1,524 in China Galaxy Securities on October 17, 2024 and sell it today you would lose (136.00) from holding China Galaxy Securities or give up 8.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Masterwork Machinery vs. China Galaxy Securities
Performance |
| Timeline |
| Masterwork Machinery |
| China Galaxy Securities |
Masterwork Machinery and China Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masterwork Machinery and China Galaxy
The main advantage of trading using opposite Masterwork Machinery and China Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masterwork Machinery position performs unexpectedly, China Galaxy 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 Galaxy will offset losses from the drop in China Galaxy's long position.The idea behind Masterwork Machinery and China Galaxy Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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