Correlation Between American Public and CHINA CONBANK
Can any of the company-specific risk be diversified away by investing in both American Public and CHINA CONBANK 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 American Public and CHINA CONBANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and CHINA BANK ADR20, you can compare the effects of market volatilities on American Public and CHINA CONBANK 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 American Public with a short position of CHINA CONBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and CHINA CONBANK.
Diversification Opportunities for American Public and CHINA CONBANK
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and CHINA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 and American Public 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 American Public Education are associated (or correlated) with CHINA CONBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of American Public i.e., American Public and CHINA CONBANK go up and down completely randomly.
Pair Corralation between American Public and CHINA CONBANK
Assuming the 90 days horizon American Public Education is expected to generate 3.82 times more return on investment than CHINA CONBANK. However, American Public is 3.82 times more volatile than CHINA BANK ADR20. It trades about 0.42 of its potential returns per unit of risk. CHINA BANK ADR20 is currently generating about -0.03 per unit of risk. If you would invest 1,370 in American Public Education on September 3, 2024 and sell it today you would earn a total of 550.00 from holding American Public Education or generate 40.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. CHINA BANK ADR20
Performance |
| Timeline |
| American Public Education |
| CHINA BANK ADR20 |
American Public and CHINA CONBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and CHINA CONBANK
The main advantage of trading using opposite American Public and CHINA CONBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, CHINA CONBANK 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 CONBANK will offset losses from the drop in CHINA CONBANK's long position.| American Public vs. Strategic Education | American Public vs. Laureate Education | American Public vs. COGNA EDUCACAO SPADR |
| CHINA CONBANK vs. KOOL2PLAY SA ZY | CHINA CONBANK vs. SYSTEMAIR AB | CHINA CONBANK vs. Playtech plc | CHINA CONBANK vs. Air New Zealand |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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