Correlation Between Cambricon Technologies and ADAMA
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By analyzing existing cross correlation between Cambricon Technologies Corp and ADAMA, you can compare the effects of market volatilities on Cambricon Technologies and ADAMA 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 Cambricon Technologies with a short position of ADAMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambricon Technologies and ADAMA.
Diversification Opportunities for Cambricon Technologies and ADAMA
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cambricon and ADAMA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cambricon Technologies Corp and ADAMA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADAMA and Cambricon Technologies 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 Cambricon Technologies Corp are associated (or correlated) with ADAMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADAMA has no effect on the direction of Cambricon Technologies i.e., Cambricon Technologies and ADAMA go up and down completely randomly.
Pair Corralation between Cambricon Technologies and ADAMA
Assuming the 90 days trading horizon Cambricon Technologies Corp is expected to generate 2.24 times more return on investment than ADAMA. However, Cambricon Technologies is 2.24 times more volatile than ADAMA. It trades about 0.11 of its potential returns per unit of risk. ADAMA is currently generating about -0.02 per unit of risk. If you would invest 6,571 in Cambricon Technologies Corp on August 30, 2024 and sell it today you would earn a total of 46,884 from holding Cambricon Technologies Corp or generate 713.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambricon Technologies Corp vs. ADAMA
Performance |
| Timeline |
| Cambricon Technologies |
| ADAMA |
Cambricon Technologies and ADAMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambricon Technologies and ADAMA
The main advantage of trading using opposite Cambricon Technologies and ADAMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambricon Technologies position performs unexpectedly, ADAMA 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 ADAMA will offset losses from the drop in ADAMA's long position.The idea behind Cambricon Technologies Corp and ADAMA 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.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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