Correlation Between Newretail and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Newretail and CHINA DEVELOPMENT 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 Newretail and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Newretail and CHINA DEVELOPMENT 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 Newretail with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and CHINA DEVELOPMENT.
Diversification Opportunities for Newretail and CHINA DEVELOPMENT
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Newretail and CHINA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Newretail 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 Newretail Co are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Newretail i.e., Newretail and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Newretail and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Newretail Co is expected to generate 11.68 times more return on investment than CHINA DEVELOPMENT. However, Newretail is 11.68 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about 0.18 of its potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about -0.3 per unit of risk. If you would invest 2,100 in Newretail Co on September 12, 2024 and sell it today you would earn a total of 350.00 from holding Newretail Co or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newretail Co vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Newretail |
| CHINA DEVELOPMENT |
Newretail and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and CHINA DEVELOPMENT
The main advantage of trading using opposite Newretail and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail position performs unexpectedly, CHINA DEVELOPMENT 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 DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.| Newretail vs. President Chain Store | Newretail vs. Uni President Enterprises Corp | Newretail vs. Eclat Textile Co | Newretail vs. Ruentex Development Co |
| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. CTBC Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Mid Cap | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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