Correlation Between China Times and Cowealth Medical
Can any of the company-specific risk be diversified away by investing in both China Times and Cowealth Medical 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 China Times and Cowealth Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Times Publishing and Cowealth Medical Holding, you can compare the effects of market volatilities on China Times and Cowealth Medical 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 China Times with a short position of Cowealth Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Times and Cowealth Medical.
Diversification Opportunities for China Times and Cowealth Medical
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Cowealth is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Times Publishing and Cowealth Medical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowealth Medical Holding and China Times 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 China Times Publishing are associated (or correlated) with Cowealth Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowealth Medical Holding has no effect on the direction of China Times i.e., China Times and Cowealth Medical go up and down completely randomly.
Pair Corralation between China Times and Cowealth Medical
Assuming the 90 days trading horizon China Times Publishing is expected to generate 2.65 times more return on investment than Cowealth Medical. However, China Times is 2.65 times more volatile than Cowealth Medical Holding. It trades about 0.04 of its potential returns per unit of risk. Cowealth Medical Holding is currently generating about -0.01 per unit of risk. If you would invest 1,935 in China Times Publishing on November 23, 2024 and sell it today you would earn a total of 45.00 from holding China Times Publishing or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Times Publishing vs. Cowealth Medical Holding
Performance |
| Timeline |
| China Times Publishing |
| Cowealth Medical Holding |
China Times and Cowealth Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Times and Cowealth Medical
The main advantage of trading using opposite China Times and Cowealth Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Times position performs unexpectedly, Cowealth Medical 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 Cowealth Medical will offset losses from the drop in Cowealth Medical's long position.| China Times vs. Unitech Electronics Co | ||
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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