Correlation Between AIR PRODCHEMICALS and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Chongqing Machinery 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 AIR PRODCHEMICALS and Chongqing Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Chongqing Machinery Electric, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Chongqing Machinery 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 AIR PRODCHEMICALS with a short position of Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Chongqing Machinery.
Diversification Opportunities for AIR PRODCHEMICALS and Chongqing Machinery
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIR and Chongqing is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS are associated (or correlated) with Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Chongqing Machinery go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Chongqing Machinery
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.35 times more return on investment than Chongqing Machinery. However, AIR PRODCHEMICALS is 2.88 times less risky than Chongqing Machinery. It trades about 0.07 of its potential returns per unit of risk. Chongqing Machinery Electric is currently generating about 0.01 per unit of risk. If you would invest 29,320 in AIR PRODCHEMICALS on September 14, 2024 and sell it today you would earn a total of 430.00 from holding AIR PRODCHEMICALS or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Chongqing Machinery Electric
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Chongqing Machinery |
AIR PRODCHEMICALS and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Chongqing Machinery
The main advantage of trading using opposite AIR PRODCHEMICALS and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc |
| Chongqing Machinery vs. TRAVEL LEISURE DL 01 | Chongqing Machinery vs. Air Transport Services | Chongqing Machinery vs. AIR PRODCHEMICALS | Chongqing Machinery vs. Lifeway Foods |
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
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |