Correlation Between Bank of Zhengzhou and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both Bank of Zhengzhou and ETFS Coffee 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 Bank of Zhengzhou and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Zhengzhou and ETFS Coffee ETC, you can compare the effects of market volatilities on Bank of Zhengzhou and ETFS Coffee 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 Bank of Zhengzhou with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Zhengzhou and ETFS Coffee.
Diversification Opportunities for Bank of Zhengzhou and ETFS Coffee
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and ETFS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Zhengzhou and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC and Bank of Zhengzhou 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 Bank of Zhengzhou are associated (or correlated) with ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of Bank of Zhengzhou i.e., Bank of Zhengzhou and ETFS Coffee go up and down completely randomly.
Pair Corralation between Bank of Zhengzhou and ETFS Coffee
Assuming the 90 days horizon Bank of Zhengzhou is expected to generate 23.56 times less return on investment than ETFS Coffee. But when comparing it to its historical volatility, Bank of Zhengzhou is 10.14 times less risky than ETFS Coffee. It trades about 0.02 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 97.00 in ETFS Coffee ETC on October 19, 2024 and sell it today you would earn a total of 5,284 from holding ETFS Coffee ETC or generate 5447.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Bank of Zhengzhou vs. ETFS Coffee ETC
Performance |
| Timeline |
| Bank of Zhengzhou |
| ETFS Coffee ETC |
Bank of Zhengzhou and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Zhengzhou and ETFS Coffee
The main advantage of trading using opposite Bank of Zhengzhou and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Zhengzhou position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| Bank of Zhengzhou vs. China Merchants Bank | Bank of Zhengzhou vs. HDFC Bank Limited | Bank of Zhengzhou vs. ICICI Bank Limited | Bank of Zhengzhou vs. PT Bank Central |
| ETFS Coffee vs. CANON MARKETING JP | ETFS Coffee vs. Entravision Communications | ETFS Coffee vs. H2O Retailing | ETFS Coffee vs. TRADEDOUBLER AB SK |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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