Correlation Between China Television and Scan D
Can any of the company-specific risk be diversified away by investing in both China Television and Scan D 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 Television and Scan D into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Television Co and Scan D, you can compare the effects of market volatilities on China Television and Scan D 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 Television with a short position of Scan D. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Television and Scan D.
Diversification Opportunities for China Television and Scan D
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Scan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding China Television Co and Scan D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scan D and China Television 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 Television Co are associated (or correlated) with Scan D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scan D has no effect on the direction of China Television i.e., China Television and Scan D go up and down completely randomly.
Pair Corralation between China Television and Scan D
Assuming the 90 days trading horizon China Television Co is expected to under-perform the Scan D. In addition to that, China Television is 2.94 times more volatile than Scan D. It trades about -0.05 of its total potential returns per unit of risk. Scan D is currently generating about -0.04 per unit of volatility. If you would invest 3,917 in Scan D on October 28, 2024 and sell it today you would lose (547.00) from holding Scan D or give up 13.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Television Co vs. Scan D
Performance |
| Timeline |
| China Television |
| Scan D |
China Television and Scan D Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Television and Scan D
The main advantage of trading using opposite China Television and Scan D positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Television position performs unexpectedly, Scan D 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 Scan D will offset losses from the drop in Scan D's long position.| China Television vs. Abnova Taiwan Corp | China Television vs. Cheng Mei Materials | China Television vs. BizLink Holding | China Television vs. Lemtech Holdings Co |
| Scan D vs. Arbor Technology | Scan D vs. Grand Ocean Retail | Scan D vs. Louisa Professional Coffee | Scan D vs. Elitegroup Computer Systems |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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