Correlation Between Alar Pharmaceuticals and China Television
Can any of the company-specific risk be diversified away by investing in both Alar Pharmaceuticals and China Television 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 Alar Pharmaceuticals and China Television into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alar Pharmaceuticals and China Television Co, you can compare the effects of market volatilities on Alar Pharmaceuticals and China Television 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 Alar Pharmaceuticals with a short position of China Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alar Pharmaceuticals and China Television.
Diversification Opportunities for Alar Pharmaceuticals and China Television
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alar and China is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alar Pharmaceuticals and China Television Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Television and Alar Pharmaceuticals 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 Alar Pharmaceuticals are associated (or correlated) with China Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Television has no effect on the direction of Alar Pharmaceuticals i.e., Alar Pharmaceuticals and China Television go up and down completely randomly.
Pair Corralation between Alar Pharmaceuticals and China Television
Assuming the 90 days trading horizon Alar Pharmaceuticals is expected to generate 1.95 times less return on investment than China Television. In addition to that, Alar Pharmaceuticals is 1.77 times more volatile than China Television Co. It trades about 0.03 of its total potential returns per unit of risk. China Television Co is currently generating about 0.12 per unit of volatility. If you would invest 1,625 in China Television Co on November 7, 2024 and sell it today you would earn a total of 60.00 from holding China Television Co or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alar Pharmaceuticals vs. China Television Co
Performance |
| Timeline |
| Alar Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Television |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alar Pharmaceuticals and China Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alar Pharmaceuticals and China Television
The main advantage of trading using opposite Alar Pharmaceuticals and China Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alar Pharmaceuticals position performs unexpectedly, China Television 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 Television will offset losses from the drop in China Television's long position.The idea behind Alar Pharmaceuticals and China Television Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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