Correlation Between Great China and Provision Information
Can any of the company-specific risk be diversified away by investing in both Great China and Provision Information 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 Great China and Provision Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great China Metal and Provision Information CoLtd, you can compare the effects of market volatilities on Great China and Provision Information 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 Great China with a short position of Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great China and Provision Information.
Diversification Opportunities for Great China and Provision Information
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Provision is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Great China Metal and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information and Great China 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 Great China Metal are associated (or correlated) with Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Great China i.e., Great China and Provision Information go up and down completely randomly.
Pair Corralation between Great China and Provision Information
Assuming the 90 days trading horizon Great China Metal is expected to generate 0.45 times more return on investment than Provision Information. However, Great China Metal is 2.22 times less risky than Provision Information. It trades about 0.02 of its potential returns per unit of risk. Provision Information CoLtd is currently generating about 0.01 per unit of risk. If you would invest 2,290 in Great China Metal on August 31, 2024 and sell it today you would earn a total of 5.00 from holding Great China Metal or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great China Metal vs. Provision Information CoLtd
Performance |
| Timeline |
| Great China Metal |
| Provision Information |
Great China and Provision Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great China and Provision Information
The main advantage of trading using opposite Great China and Provision Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great China position performs unexpectedly, Provision Information 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 Provision Information will offset losses from the drop in Provision Information's long position.| Great China vs. Taiwan Hon Chuan | Great China vs. Taiwan Secom Co | Great China vs. Taiwan Fu Hsing | Great China vs. Taiwan Shin Kong |
| Provision Information vs. Great China Metal | Provision Information vs. Dynamic Medical Technologies | Provision Information vs. First Copper Technology | Provision Information vs. EnTie Commercial Bank |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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