Correlation Between Algonquin Power and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and CHINA EDUCATION 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 Algonquin Power and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Algonquin Power and CHINA EDUCATION 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 Algonquin Power with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and CHINA EDUCATION.
Diversification Opportunities for Algonquin Power and CHINA EDUCATION
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algonquin and CHINA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Algonquin Power 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 Algonquin Power Utilities are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Algonquin Power i.e., Algonquin Power and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Algonquin Power and CHINA EDUCATION
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the CHINA EDUCATION. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 2.42 times less risky than CHINA EDUCATION. The stock trades about -0.02 of its potential returns per unit of risk. The CHINA EDUCATION GROUP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 24.00 in CHINA EDUCATION GROUP on August 24, 2024 and sell it today you would earn a total of 23.00 from holding CHINA EDUCATION GROUP or generate 95.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Algonquin Power Utilities |
| CHINA EDUCATION GROUP |
Algonquin Power and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and CHINA EDUCATION
The main advantage of trading using opposite Algonquin Power and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, CHINA EDUCATION 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 EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Algonquin Power vs. Superior Plus Corp | Algonquin Power vs. NMI Holdings | Algonquin Power vs. Origin Agritech | Algonquin Power vs. SIVERS SEMICONDUCTORS AB |
| CHINA EDUCATION vs. CENTURIA OFFICE REIT | CHINA EDUCATION vs. Tower One Wireless | CHINA EDUCATION vs. DFS Furniture PLC | CHINA EDUCATION vs. Beazer Homes USA |
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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