Correlation Between Chenming Mold and Spirox Corp
Can any of the company-specific risk be diversified away by investing in both Chenming Mold and Spirox Corp 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 Chenming Mold and Spirox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chenming Mold Industrial and Spirox Corp, you can compare the effects of market volatilities on Chenming Mold and Spirox Corp 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 Chenming Mold with a short position of Spirox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenming Mold and Spirox Corp.
Diversification Opportunities for Chenming Mold and Spirox Corp
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chenming and Spirox is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chenming Mold Industrial and Spirox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirox Corp and Chenming Mold 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 Chenming Mold Industrial are associated (or correlated) with Spirox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirox Corp has no effect on the direction of Chenming Mold i.e., Chenming Mold and Spirox Corp go up and down completely randomly.
Pair Corralation between Chenming Mold and Spirox Corp
Assuming the 90 days trading horizon Chenming Mold Industrial is expected to generate 1.35 times more return on investment than Spirox Corp. However, Chenming Mold is 1.35 times more volatile than Spirox Corp. It trades about -0.12 of its potential returns per unit of risk. Spirox Corp is currently generating about -0.23 per unit of risk. If you would invest 16,250 in Chenming Mold Industrial on September 1, 2024 and sell it today you would lose (1,650) from holding Chenming Mold Industrial or give up 10.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chenming Mold Industrial vs. Spirox Corp
Performance |
| Timeline |
| Chenming Mold Industrial |
| Spirox Corp |
Chenming Mold and Spirox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chenming Mold and Spirox Corp
The main advantage of trading using opposite Chenming Mold and Spirox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chenming Mold position performs unexpectedly, Spirox Corp 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 Spirox Corp will offset losses from the drop in Spirox Corp's long position.The idea behind Chenming Mold Industrial and Spirox Corp 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.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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