Correlation Between Aluminumof China and 1st Federal
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and 1st Federal 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 Aluminumof China and 1st Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and 1st Federal Savings, you can compare the effects of market volatilities on Aluminumof China and 1st Federal 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 Aluminumof China with a short position of 1st Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and 1st Federal.
Diversification Opportunities for Aluminumof China and 1st Federal
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aluminumof and 1st is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and 1st Federal Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Federal Savings and Aluminumof 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 Aluminum of are associated (or correlated) with 1st Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Federal Savings has no effect on the direction of Aluminumof China i.e., Aluminumof China and 1st Federal go up and down completely randomly.
Pair Corralation between Aluminumof China and 1st Federal
Assuming the 90 days horizon Aluminum of is expected to generate 3.75 times more return on investment than 1st Federal. However, Aluminumof China is 3.75 times more volatile than 1st Federal Savings. It trades about 0.2 of its potential returns per unit of risk. 1st Federal Savings is currently generating about 0.24 per unit of risk. If you would invest 56.00 in Aluminum of on October 24, 2024 and sell it today you would earn a total of 7.00 from holding Aluminum of or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. 1st Federal Savings
Performance |
| Timeline |
| Aluminumof China |
| 1st Federal Savings |
Aluminumof China and 1st Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and 1st Federal
The main advantage of trading using opposite Aluminumof China and 1st Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, 1st Federal 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 1st Federal will offset losses from the drop in 1st Federal's long position.| Aluminumof China vs. Air China Limited | Aluminumof China vs. COSCO SHIPPING Holdings | Aluminumof China vs. Zijin Mining Group | Aluminumof China vs. Bank of China |
| 1st Federal vs. Hafnia Limited | 1st Federal vs. Norfolk Southern | 1st Federal vs. United Airlines Holdings | 1st Federal vs. Mesa Air Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |