Correlation Between Berkshire Hathaway and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Aluminumof China 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 Berkshire Hathaway and Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Aluminum of, you can compare the effects of market volatilities on Berkshire Hathaway and Aluminumof China 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 Berkshire Hathaway with a short position of Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Aluminumof China.
Diversification Opportunities for Berkshire Hathaway and Aluminumof China
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Berkshire and Aluminumof is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Aluminumof China go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Aluminumof China
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 18.39 times more return on investment than Aluminumof China. However, Berkshire Hathaway is 18.39 times more volatile than Aluminum of. It trades about 0.06 of its potential returns per unit of risk. Aluminum of is currently generating about 0.07 per unit of risk. If you would invest 49,750,000 in Berkshire Hathaway on September 14, 2024 and sell it today you would earn a total of 15,850,000 from holding Berkshire Hathaway or generate 31.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Aluminum of
Performance |
| Timeline |
| Berkshire Hathaway |
| Aluminumof China |
Berkshire Hathaway and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Aluminumof China
The main advantage of trading using opposite Berkshire Hathaway and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| Berkshire Hathaway vs. Aluminum of | Berkshire Hathaway vs. ADRIATIC METALS LS 013355 | Berkshire Hathaway vs. PennantPark Investment | Berkshire Hathaway vs. SLR Investment Corp |
| Aluminumof China vs. Norsk Hydro ASA | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Superior Plus Corp | Aluminumof China 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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