Correlation Between China Crystal and InnoTherapy
Can any of the company-specific risk be diversified away by investing in both China Crystal and InnoTherapy 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 InnoTherapy 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 InnoTherapy, you can compare the effects of market volatilities on China Crystal and InnoTherapy 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 InnoTherapy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Crystal and InnoTherapy.
Diversification Opportunities for China Crystal and InnoTherapy
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and InnoTherapy is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding China Crystal New and InnoTherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnoTherapy 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 InnoTherapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnoTherapy has no effect on the direction of China Crystal i.e., China Crystal and InnoTherapy go up and down completely randomly.
Pair Corralation between China Crystal and InnoTherapy
Assuming the 90 days trading horizon China Crystal New is expected to generate 1.24 times more return on investment than InnoTherapy. However, China Crystal is 1.24 times more volatile than InnoTherapy. It trades about 0.02 of its potential returns per unit of risk. InnoTherapy is currently generating about -0.04 per unit of risk. If you would invest 92,300 in China Crystal New on August 27, 2024 and sell it today you would earn a total of 300.00 from holding China Crystal New or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Crystal New vs. InnoTherapy
Performance |
| Timeline |
| China Crystal New |
| InnoTherapy |
China Crystal and InnoTherapy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Crystal and InnoTherapy
The main advantage of trading using opposite China Crystal and InnoTherapy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Crystal position performs unexpectedly, InnoTherapy 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 InnoTherapy will offset losses from the drop in InnoTherapy's long position.| China Crystal vs. Clean Science co | China Crystal vs. Samji Electronics Co | China Crystal vs. Samwha Electronics Co | China Crystal vs. Jeju Semiconductor Corp |
| InnoTherapy vs. Kolon Life Science | InnoTherapy vs. Aminologics CoLtd | InnoTherapy vs. Withuspharmaceutical CoLtd | InnoTherapy vs. High Tech Pharm |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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