Correlation Between ALEFARM BREWING and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING 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 ALEFARM BREWING and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALEFARM BREWING DK 05 and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on ALEFARM BREWING 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 ALEFARM BREWING with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and CHINA EDUCATION.
Diversification Opportunities for ALEFARM BREWING and CHINA EDUCATION
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ALEFARM and CHINA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 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 ALEFARM BREWING 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 ALEFARM BREWING DK 05 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 ALEFARM BREWING i.e., ALEFARM BREWING and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between ALEFARM BREWING and CHINA EDUCATION
Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to under-perform the CHINA EDUCATION. In addition to that, ALEFARM BREWING is 1.46 times more volatile than CHINA EDUCATION GROUP. It trades about -0.17 of its total potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.22 per unit of volatility. If you would invest 47.00 in CHINA EDUCATION GROUP on September 22, 2024 and sell it today you would lose (6.00) from holding CHINA EDUCATION GROUP or give up 12.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALEFARM BREWING DK 05 vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| ALEFARM BREWING DK |
| CHINA EDUCATION GROUP |
ALEFARM BREWING and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALEFARM BREWING and CHINA EDUCATION
The main advantage of trading using opposite ALEFARM BREWING and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING 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.| ALEFARM BREWING vs. GRUPO CARSO A1 | ALEFARM BREWING vs. Broadridge Financial Solutions | ALEFARM BREWING vs. TRAINLINE PLC LS | ALEFARM BREWING vs. Motorcar Parts of |
| CHINA EDUCATION vs. Sumitomo Mitsui Construction | CHINA EDUCATION vs. ALEFARM BREWING DK 05 | CHINA EDUCATION vs. ScanSource | CHINA EDUCATION vs. Entravision Communications |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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