Correlation Between Pure Storage and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Pure Storage and China BlueChemical 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 Pure Storage and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and China BlueChemical, you can compare the effects of market volatilities on Pure Storage and China BlueChemical 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 Pure Storage with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and China BlueChemical.
Diversification Opportunities for Pure Storage and China BlueChemical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pure and China is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and Pure Storage 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 Pure Storage are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Pure Storage i.e., Pure Storage and China BlueChemical go up and down completely randomly.
Pair Corralation between Pure Storage and China BlueChemical
Assuming the 90 days horizon Pure Storage is expected to generate 1.35 times more return on investment than China BlueChemical. However, Pure Storage is 1.35 times more volatile than China BlueChemical. It trades about 0.21 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.08 per unit of risk. If you would invest 5,044 in Pure Storage on October 30, 2024 and sell it today you would earn a total of 1,912 from holding Pure Storage or generate 37.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Storage vs. China BlueChemical
Performance |
| Timeline |
| Pure Storage |
| China BlueChemical |
Pure Storage and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and China BlueChemical
The main advantage of trading using opposite Pure Storage and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| Pure Storage vs. CODERE ONLINE LUX | Pure Storage vs. RYANAIR HLDGS ADR | Pure Storage vs. Ryanair Holdings plc | Pure Storage vs. Salesforce |
| China BlueChemical vs. ADRIATIC METALS LS 013355 | China BlueChemical vs. DISTRICT METALS | China BlueChemical vs. Nippon Light Metal | China BlueChemical vs. Martin Marietta Materials |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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