Correlation Between Champion Microelectronic and Gold Rain
Can any of the company-specific risk be diversified away by investing in both Champion Microelectronic and Gold Rain 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 Champion Microelectronic and Gold Rain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Microelectronic Corp and Gold Rain Enterprises, you can compare the effects of market volatilities on Champion Microelectronic and Gold Rain 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 Champion Microelectronic with a short position of Gold Rain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Microelectronic and Gold Rain.
Diversification Opportunities for Champion Microelectronic and Gold Rain
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Gold is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Champion Microelectronic Corp and Gold Rain Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Rain Enterprises and Champion Microelectronic 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 Champion Microelectronic Corp are associated (or correlated) with Gold Rain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Rain Enterprises has no effect on the direction of Champion Microelectronic i.e., Champion Microelectronic and Gold Rain go up and down completely randomly.
Pair Corralation between Champion Microelectronic and Gold Rain
Assuming the 90 days trading horizon Champion Microelectronic Corp is expected to under-perform the Gold Rain. But the stock apears to be less risky and, when comparing its historical volatility, Champion Microelectronic Corp is 1.13 times less risky than Gold Rain. The stock trades about -0.03 of its potential returns per unit of risk. The Gold Rain Enterprises is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,800 in Gold Rain Enterprises on October 28, 2024 and sell it today you would lose (310.00) from holding Gold Rain Enterprises or give up 5.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Microelectronic Corp vs. Gold Rain Enterprises
Performance |
| Timeline |
| Champion Microelectronic |
| Gold Rain Enterprises |
Champion Microelectronic and Gold Rain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Microelectronic and Gold Rain
The main advantage of trading using opposite Champion Microelectronic and Gold Rain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Microelectronic position performs unexpectedly, Gold Rain 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 Gold Rain will offset losses from the drop in Gold Rain's long position.The idea behind Champion Microelectronic Corp and Gold Rain Enterprises 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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