Correlation Between SIDETRADE and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both SIDETRADE 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 SIDETRADE and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIDETRADE EO 1 and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on SIDETRADE 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 SIDETRADE with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and CHINA EDUCATION.
Diversification Opportunities for SIDETRADE and CHINA EDUCATION
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIDETRADE and CHINA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 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 SIDETRADE 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 SIDETRADE EO 1 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 SIDETRADE i.e., SIDETRADE and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between SIDETRADE and CHINA EDUCATION
Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 1.2 times more return on investment than CHINA EDUCATION. However, SIDETRADE is 1.2 times more volatile than CHINA EDUCATION GROUP. It trades about 0.16 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.01 per unit of risk. If you would invest 22,200 in SIDETRADE EO 1 on November 3, 2024 and sell it today you would earn a total of 2,300 from holding SIDETRADE EO 1 or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIDETRADE EO 1 vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| SIDETRADE EO 1 |
| CHINA EDUCATION GROUP |
SIDETRADE and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIDETRADE and CHINA EDUCATION
The main advantage of trading using opposite SIDETRADE and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE 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.| SIDETRADE vs. United Breweries Co | SIDETRADE vs. Westinghouse Air Brake | SIDETRADE vs. China Resources Beer | SIDETRADE vs. Thai Beverage Public |
| CHINA EDUCATION vs. CARDINAL HEALTH | CHINA EDUCATION vs. WESANA HEALTH HOLD | CHINA EDUCATION vs. CLOVER HEALTH INV | CHINA EDUCATION vs. MPH Health Care |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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