Correlation Between Superior Plus and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and China BlueChemical, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and China BlueChemical.
Diversification Opportunities for Superior Plus and China BlueChemical
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and China is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and China BlueChemical go up and down completely randomly.
Pair Corralation between Superior Plus and China BlueChemical
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the China BlueChemical. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 1.05 times less risky than China BlueChemical. The stock trades about -0.05 of its potential returns per unit of risk. The China BlueChemical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 21.00 in China BlueChemical on August 31, 2024 and sell it today you would earn a total of 3.00 from holding China BlueChemical or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. China BlueChemical
Performance |
| Timeline |
| Superior Plus Corp |
| China BlueChemical |
Superior Plus and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and China BlueChemical
The main advantage of trading using opposite Superior Plus and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. BROADSTNET LEADL 00025 | Superior Plus vs. Mitsubishi Materials | Superior Plus vs. Martin Marietta Materials | Superior Plus vs. Summit Materials |
| China BlueChemical vs. Dalata Hotel Group | China BlueChemical vs. HANOVER INSURANCE | China BlueChemical vs. The Hanover Insurance | China BlueChemical vs. Host Hotels Resorts |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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