Correlation Between USWE SPORTS and China Communications
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and China Communications 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 USWE SPORTS and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and China Communications Construction, you can compare the effects of market volatilities on USWE SPORTS and China Communications 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 USWE SPORTS with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and China Communications.
Diversification Opportunities for USWE SPORTS and China Communications
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USWE and China is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and China Communications Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and China Communications go up and down completely randomly.
Pair Corralation between USWE SPORTS and China Communications
Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the China Communications. But the stock apears to be less risky and, when comparing its historical volatility, USWE SPORTS AB is 3.9 times less risky than China Communications. The stock trades about -0.2 of its potential returns per unit of risk. The China Communications Construction is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 48.00 in China Communications Construction on September 12, 2024 and sell it today you would earn a total of 13.00 from holding China Communications Construction or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. China Communications Construct
Performance |
| Timeline |
| USWE SPORTS AB |
| China Communications |
USWE SPORTS and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and China Communications
The main advantage of trading using opposite USWE SPORTS and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| USWE SPORTS vs. MARKET VECTR RETAIL | USWE SPORTS vs. ECHO INVESTMENT ZY | USWE SPORTS vs. COSTCO WHOLESALE CDR | USWE SPORTS vs. AGNC INVESTMENT |
| China Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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