Correlation Between ARROW ELECTRONICS and CHINA SOUTHN
Can any of the company-specific risk be diversified away by investing in both ARROW ELECTRONICS and CHINA SOUTHN 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 ARROW ELECTRONICS and CHINA SOUTHN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARROW ELECTRONICS and CHINA SOUTHN AIR H , you can compare the effects of market volatilities on ARROW ELECTRONICS and CHINA SOUTHN 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 ARROW ELECTRONICS with a short position of CHINA SOUTHN. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARROW ELECTRONICS and CHINA SOUTHN.
Diversification Opportunities for ARROW ELECTRONICS and CHINA SOUTHN
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARROW and CHINA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and CHINA SOUTHN AIR H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SOUTHN AIR and ARROW ELECTRONICS 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 ARROW ELECTRONICS are associated (or correlated) with CHINA SOUTHN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SOUTHN AIR has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and CHINA SOUTHN go up and down completely randomly.
Pair Corralation between ARROW ELECTRONICS and CHINA SOUTHN
Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to generate 3.6 times more return on investment than CHINA SOUTHN. However, ARROW ELECTRONICS is 3.6 times more volatile than CHINA SOUTHN AIR H . It trades about 0.03 of its potential returns per unit of risk. CHINA SOUTHN AIR H is currently generating about 0.0 per unit of risk. If you would invest 12,200 in ARROW ELECTRONICS on October 30, 2024 and sell it today you would lose (1,100) from holding ARROW ELECTRONICS or give up 9.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARROW ELECTRONICS vs. CHINA SOUTHN AIR H
Performance |
| Timeline |
| ARROW ELECTRONICS |
| CHINA SOUTHN AIR |
ARROW ELECTRONICS and CHINA SOUTHN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARROW ELECTRONICS and CHINA SOUTHN
The main advantage of trading using opposite ARROW ELECTRONICS and CHINA SOUTHN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARROW ELECTRONICS position performs unexpectedly, CHINA SOUTHN 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 SOUTHN will offset losses from the drop in CHINA SOUTHN's long position.| ARROW ELECTRONICS vs. EIDESVIK OFFSHORE NK | ARROW ELECTRONICS vs. Grupo Carso SAB | ARROW ELECTRONICS vs. GRUPO CARSO A1 | ARROW ELECTRONICS vs. Motorcar Parts of |
| CHINA SOUTHN vs. Gaming and Leisure | CHINA SOUTHN vs. PLAYTIKA HOLDING DL 01 | CHINA SOUTHN vs. Eidesvik Offshore ASA | CHINA SOUTHN vs. Universal Display |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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