Correlation Between Grupo Aval and China Health
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and China Health 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 Grupo Aval and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval and China Health Industries, you can compare the effects of market volatilities on Grupo Aval and China Health 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 Grupo Aval with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and China Health.
Diversification Opportunities for Grupo Aval and China Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Grupo and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and China Health Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Industries and Grupo Aval 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 Grupo Aval are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Industries has no effect on the direction of Grupo Aval i.e., Grupo Aval and China Health go up and down completely randomly.
Pair Corralation between Grupo Aval and China Health
Given the investment horizon of 90 days Grupo Aval is expected to generate 87.7 times less return on investment than China Health. But when comparing it to its historical volatility, Grupo Aval is 18.62 times less risky than China Health. It trades about 0.01 of its potential returns per unit of risk. China Health Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17.00 in China Health Industries on September 3, 2024 and sell it today you would earn a total of 16.00 from holding China Health Industries or generate 94.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval vs. China Health Industries
Performance |
| Timeline |
| Grupo Aval |
| China Health Industries |
Grupo Aval and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and China Health
The main advantage of trading using opposite Grupo Aval and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, China Health 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 Health will offset losses from the drop in China Health's long position.| Grupo Aval vs. Banco De Chile | Grupo Aval vs. Banco Santander Chile | Grupo Aval vs. Credicorp | Grupo Aval vs. Foreign Trade Bank |
| China Health vs. Federal National Mortgage | China Health vs. Shinhan Financial Group | China Health vs. Woori Financial Group | China Health vs. Grupo Aval |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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