Correlation Between Broadwind and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Broadwind and China BlueChemical 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 Broadwind and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and China BlueChemical, you can compare the effects of market volatilities on Broadwind and China BlueChemical 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 Broadwind with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and China BlueChemical.
Diversification Opportunities for Broadwind and China BlueChemical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Broadwind and China is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and Broadwind 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 Broadwind are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Broadwind i.e., Broadwind and China BlueChemical go up and down completely randomly.
Pair Corralation between Broadwind and China BlueChemical
Assuming the 90 days trading horizon Broadwind is expected to under-perform the China BlueChemical. In addition to that, Broadwind is 1.35 times more volatile than China BlueChemical. It trades about -0.01 of its total potential returns per unit of risk. China BlueChemical is currently generating about 0.03 per unit of volatility. If you would invest 22.00 in China BlueChemical on October 16, 2024 and sell it today you would earn a total of 4.00 from holding China BlueChemical or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadwind vs. China BlueChemical
Performance |
| Timeline |
| Broadwind |
| China BlueChemical |
Broadwind and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and China BlueChemical
The main advantage of trading using opposite Broadwind and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| Broadwind vs. Apollo Investment Corp | Broadwind vs. ALERION CLEANPOWER | Broadwind vs. WisdomTree Investments | Broadwind vs. PennantPark Investment |
| China BlueChemical vs. Linedata Services SA | China BlueChemical vs. Pure Storage | China BlueChemical vs. CODERE ONLINE LUX | China BlueChemical vs. MICRONIC MYDATA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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