Correlation Between Top Union and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Top Union and CHINA DEVELOPMENT 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 Top Union and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Union Electronics and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Top Union and CHINA DEVELOPMENT 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 Top Union with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Union and CHINA DEVELOPMENT.
Diversification Opportunities for Top Union and CHINA DEVELOPMENT
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Top and CHINA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Top Union Electronics and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Top Union 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 Top Union Electronics are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Top Union i.e., Top Union and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Top Union and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Top Union Electronics is expected to under-perform the CHINA DEVELOPMENT. In addition to that, Top Union is 6.96 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about -0.22 of its total potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.41 per unit of volatility. If you would invest 784.00 in CHINA DEVELOPMENT FINANCIAL on October 25, 2024 and sell it today you would earn a total of 10.00 from holding CHINA DEVELOPMENT FINANCIAL or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Union Electronics vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Top Union Electronics |
| CHINA DEVELOPMENT |
Top Union and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Union and CHINA DEVELOPMENT
The main advantage of trading using opposite Top Union and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Union position performs unexpectedly, CHINA DEVELOPMENT 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 DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.| Top Union vs. First Insurance Co | Top Union vs. China Development Financial | Top Union vs. ESUN Financial Holding | Top Union vs. Hua Nan Financial |
| CHINA DEVELOPMENT vs. Eastern Media International | CHINA DEVELOPMENT vs. GameSparcs Co | CHINA DEVELOPMENT vs. Formosa International Hotels | CHINA DEVELOPMENT vs. Hotel Holiday Garden |
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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