Correlation Between Allegheny Technologies and China Communications
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and China Communications 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 Allegheny Technologies and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and China Communications Services, you can compare the effects of market volatilities on Allegheny Technologies and China Communications 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 Allegheny Technologies with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and China Communications.
Diversification Opportunities for Allegheny Technologies and China Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Allegheny and China is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and Allegheny Technologies 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 Allegheny Technologies Incorporated are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and China Communications go up and down completely randomly.
Pair Corralation between Allegheny Technologies and China Communications
Assuming the 90 days trading horizon Allegheny Technologies is expected to generate 3.73 times less return on investment than China Communications. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 2.81 times less risky than China Communications. It trades about 0.06 of its potential returns per unit of risk. China Communications Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9.05 in China Communications Services on October 23, 2024 and sell it today you would earn a total of 42.95 from holding China Communications Services or generate 474.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. China Communications Services
Performance |
| Timeline |
| Allegheny Technologies |
| China Communications |
Allegheny Technologies and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and China Communications
The main advantage of trading using opposite Allegheny Technologies and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc |
| China Communications vs. GameStop Corp | China Communications vs. CONTAGIOUS GAMING INC | China Communications vs. CODERE ONLINE LUX | China Communications vs. Gaming and Leisure |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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