Correlation Between Bridgestone and CHINA SOUTHN
Can any of the company-specific risk be diversified away by investing in both Bridgestone 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 Bridgestone and CHINA SOUTHN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgestone and CHINA SOUTHN AIR H , you can compare the effects of market volatilities on Bridgestone 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 Bridgestone with a short position of CHINA SOUTHN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone and CHINA SOUTHN.
Diversification Opportunities for Bridgestone and CHINA SOUTHN
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bridgestone and CHINA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone 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 Bridgestone 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 Bridgestone 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 Bridgestone i.e., Bridgestone and CHINA SOUTHN go up and down completely randomly.
Pair Corralation between Bridgestone and CHINA SOUTHN
Assuming the 90 days trading horizon Bridgestone is expected to generate 0.5 times more return on investment than CHINA SOUTHN. However, Bridgestone is 1.98 times less risky than CHINA SOUTHN. It trades about 0.16 of its potential returns per unit of risk. CHINA SOUTHN AIR H is currently generating about -0.06 per unit of risk. If you would invest 1,590 in Bridgestone on November 5, 2024 and sell it today you would earn a total of 80.00 from holding Bridgestone or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgestone vs. CHINA SOUTHN AIR H
Performance |
| Timeline |
| Bridgestone |
| CHINA SOUTHN AIR |
Bridgestone and CHINA SOUTHN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgestone and CHINA SOUTHN
The main advantage of trading using opposite Bridgestone and CHINA SOUTHN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone 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.| Bridgestone vs. ASURE SOFTWARE | Bridgestone vs. INTER CARS SA | Bridgestone vs. CyberArk Software | Bridgestone vs. PSI Software AG |
| CHINA SOUTHN vs. AIR LIQUIDE ADR | CHINA SOUTHN vs. Delta Air Lines | CHINA SOUTHN vs. Westinghouse Air Brake | CHINA SOUTHN vs. Easy Software AG |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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