Correlation Between China Crystal and Clean Science

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Can any of the company-specific risk be diversified away by investing in both China Crystal and Clean Science 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 Crystal and Clean Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Crystal New and Clean Science co, you can compare the effects of market volatilities on China Crystal and Clean Science 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 Crystal with a short position of Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Crystal and Clean Science.

Diversification Opportunities for China Crystal and Clean Science

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between China and Clean is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding China Crystal New and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co and China Crystal 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 Crystal New are associated (or correlated) with Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of China Crystal i.e., China Crystal and Clean Science go up and down completely randomly.

Pair Corralation between China Crystal and Clean Science

Assuming the 90 days trading horizon China Crystal New is expected to generate 2.03 times more return on investment than Clean Science. However, China Crystal is 2.03 times more volatile than Clean Science co. It trades about -0.11 of its potential returns per unit of risk. Clean Science co is currently generating about -0.46 per unit of risk. If you would invest  96,100  in China Crystal New on August 31, 2024 and sell it today you would lose (5,400) from holding China Crystal New or give up 5.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

China Crystal New  vs.  Clean Science co

 Performance 
       Timeline  
China Crystal New 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days China Crystal New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Crystal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Clean Science co 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Clean Science co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

China Crystal and Clean Science Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Crystal and Clean Science

The main advantage of trading using opposite China Crystal and Clean Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Crystal position performs unexpectedly, Clean Science 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 Clean Science will offset losses from the drop in Clean Science's long position.
The idea behind China Crystal New and Clean Science co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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