Correlation Between AIR PRODCHEMICALS and Chuangs China
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Chuangs China 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 Chuangs China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Chuangs China Investments, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Chuangs China 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 Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Chuangs China.
Diversification Opportunities for AIR PRODCHEMICALS and Chuangs China
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between AIR and Chuangs is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments 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 Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Chuangs China go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Chuangs China
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 1.76 times more return on investment than Chuangs China. However, AIR PRODCHEMICALS is 1.76 times more volatile than Chuangs China Investments. It trades about 0.12 of its potential returns per unit of risk. Chuangs China Investments is currently generating about 0.0 per unit of risk. If you would invest 25,630 in AIR PRODCHEMICALS on September 20, 2024 and sell it today you would earn a total of 3,120 from holding AIR PRODCHEMICALS or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Chuangs China Investments
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Chuangs China Investments |
AIR PRODCHEMICALS and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Chuangs China
The main advantage of trading using opposite AIR PRODCHEMICALS and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Microsoft |
| Chuangs China vs. Superior Plus Corp | Chuangs China vs. SIVERS SEMICONDUCTORS AB | Chuangs China vs. Reliance Steel Aluminum | Chuangs China vs. CHINA HUARONG ENERHD 50 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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