Correlation Between Lamar Advertising and China Resources
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and China Resources 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 Lamar Advertising and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and China Resources Power, you can compare the effects of market volatilities on Lamar Advertising and China Resources 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 Lamar Advertising with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and China Resources.
Diversification Opportunities for Lamar Advertising and China Resources
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lamar and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power and Lamar Advertising 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 Lamar Advertising are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Power has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and China Resources go up and down completely randomly.
Pair Corralation between Lamar Advertising and China Resources
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.87 times more return on investment than China Resources. However, Lamar Advertising is 1.14 times less risky than China Resources. It trades about -0.08 of its potential returns per unit of risk. China Resources Power is currently generating about -0.09 per unit of risk. If you would invest 12,574 in Lamar Advertising on October 28, 2024 and sell it today you would lose (574.00) from holding Lamar Advertising or give up 4.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. China Resources Power
Performance |
| Timeline |
| Lamar Advertising |
| China Resources Power |
Lamar Advertising and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and China Resources
The main advantage of trading using opposite Lamar Advertising and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, China Resources 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 Resources will offset losses from the drop in China Resources' long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| China Resources vs. FORMPIPE SOFTWARE AB | China Resources vs. Unity Software | China Resources vs. Tyson Foods | China Resources vs. Axway Software SA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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