Correlation Between Macroblock and Chinese Maritime
Can any of the company-specific risk be diversified away by investing in both Macroblock and Chinese Maritime 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 Macroblock and Chinese Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macroblock and Chinese Maritime Transport, you can compare the effects of market volatilities on Macroblock and Chinese Maritime 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 Macroblock with a short position of Chinese Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macroblock and Chinese Maritime.
Diversification Opportunities for Macroblock and Chinese Maritime
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Macroblock and Chinese is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Macroblock and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra and Macroblock 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 Macroblock are associated (or correlated) with Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of Macroblock i.e., Macroblock and Chinese Maritime go up and down completely randomly.
Pair Corralation between Macroblock and Chinese Maritime
Assuming the 90 days trading horizon Macroblock is expected to generate 2.79 times more return on investment than Chinese Maritime. However, Macroblock is 2.79 times more volatile than Chinese Maritime Transport. It trades about 0.22 of its potential returns per unit of risk. Chinese Maritime Transport is currently generating about -0.2 per unit of risk. If you would invest 6,760 in Macroblock on November 3, 2024 and sell it today you would earn a total of 790.00 from holding Macroblock or generate 11.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macroblock vs. Chinese Maritime Transport
Performance |
| Timeline |
| Macroblock |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chinese Maritime Tra |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Macroblock and Chinese Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macroblock and Chinese Maritime
The main advantage of trading using opposite Macroblock and Chinese Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macroblock position performs unexpectedly, Chinese Maritime 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 Chinese Maritime will offset losses from the drop in Chinese Maritime's long position.The idea behind Macroblock and Chinese Maritime Transport 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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