Correlation Between China World and COL Digital
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By analyzing existing cross correlation between China World Trade and COL Digital Publishing, you can compare the effects of market volatilities on China World and COL Digital 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 China World with a short position of COL Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of China World and COL Digital.
Diversification Opportunities for China World and COL Digital
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and COL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding China World Trade and COL Digital Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Digital Publishing and China World 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 China World Trade are associated (or correlated) with COL Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Digital Publishing has no effect on the direction of China World i.e., China World and COL Digital go up and down completely randomly.
Pair Corralation between China World and COL Digital
Assuming the 90 days trading horizon China World is expected to generate 1.83 times less return on investment than COL Digital. But when comparing it to its historical volatility, China World Trade is 2.16 times less risky than COL Digital. It trades about 0.22 of its potential returns per unit of risk. COL Digital Publishing is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,259 in COL Digital Publishing on November 7, 2024 and sell it today you would earn a total of 186.00 from holding COL Digital Publishing or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China World Trade vs. COL Digital Publishing
Performance |
| Timeline |
| China World Trade |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| COL Digital Publishing |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China World and COL Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China World and COL Digital
The main advantage of trading using opposite China World and COL Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China World position performs unexpectedly, COL Digital 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 COL Digital will offset losses from the drop in COL Digital's long position.The idea behind China World Trade and COL Digital Publishing 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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