Correlation Between Beazer Homes and CHINA CONBANK
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and CHINA CONBANK 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 Beazer Homes and CHINA CONBANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beazer Homes USA and CHINA BANK ADR20, you can compare the effects of market volatilities on Beazer Homes and CHINA CONBANK 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 Beazer Homes with a short position of CHINA CONBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and CHINA CONBANK.
Diversification Opportunities for Beazer Homes and CHINA CONBANK
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Beazer and CHINA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 and Beazer Homes 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 Beazer Homes USA are associated (or correlated) with CHINA CONBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of Beazer Homes i.e., Beazer Homes and CHINA CONBANK go up and down completely randomly.
Pair Corralation between Beazer Homes and CHINA CONBANK
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 1.52 times more return on investment than CHINA CONBANK. However, Beazer Homes is 1.52 times more volatile than CHINA BANK ADR20. It trades about 0.07 of its potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.06 per unit of risk. If you would invest 1,230 in Beazer Homes USA on September 12, 2024 and sell it today you would earn a total of 1,770 from holding Beazer Homes USA or generate 143.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beazer Homes USA vs. CHINA BANK ADR20
Performance |
| Timeline |
| Beazer Homes USA |
| CHINA BANK ADR20 |
Beazer Homes and CHINA CONBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and CHINA CONBANK
The main advantage of trading using opposite Beazer Homes and CHINA CONBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, CHINA CONBANK 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 CONBANK will offset losses from the drop in CHINA CONBANK's long position.| Beazer Homes vs. Perdoceo Education | Beazer Homes vs. Laureate Education | Beazer Homes vs. CompuGroup Medical SE | Beazer Homes vs. SCANDMEDICAL SOLDK 040 |
| CHINA CONBANK vs. AGRICULTBK HADR25 YC | CHINA CONBANK vs. The Toronto Dominion Bank | CHINA CONBANK vs. Superior Plus Corp | CHINA CONBANK vs. SIVERS SEMICONDUCTORS AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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