Correlation Between Chief Telecom and China Metal
Can any of the company-specific risk be diversified away by investing in both Chief Telecom and China Metal 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 Chief Telecom and China Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chief Telecom and China Metal Products, you can compare the effects of market volatilities on Chief Telecom and China Metal 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 Chief Telecom with a short position of China Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chief Telecom and China Metal.
Diversification Opportunities for Chief Telecom and China Metal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chief and China is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chief Telecom and China Metal Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Metal Products and Chief Telecom 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 Chief Telecom are associated (or correlated) with China Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Metal Products has no effect on the direction of Chief Telecom i.e., Chief Telecom and China Metal go up and down completely randomly.
Pair Corralation between Chief Telecom and China Metal
Assuming the 90 days trading horizon Chief Telecom is expected to generate 1.04 times more return on investment than China Metal. However, Chief Telecom is 1.04 times more volatile than China Metal Products. It trades about 0.07 of its potential returns per unit of risk. China Metal Products is currently generating about -0.01 per unit of risk. If you would invest 34,625 in Chief Telecom on September 1, 2024 and sell it today you would earn a total of 16,875 from holding Chief Telecom or generate 48.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Chief Telecom vs. China Metal Products
Performance |
| Timeline |
| Chief Telecom |
| China Metal Products |
Chief Telecom and China Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chief Telecom and China Metal
The main advantage of trading using opposite Chief Telecom and China Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chief Telecom position performs unexpectedly, China Metal 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 Metal will offset losses from the drop in China Metal's long position.| Chief Telecom vs. Sunny Friend Environmental | Chief Telecom vs. Aspeed Technology | Chief Telecom vs. Standard Foods Corp | Chief Telecom vs. Realtek Semiconductor Corp |
| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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