Correlation Between CDL INVESTMENT and China Communications
Can any of the company-specific risk be diversified away by investing in both CDL INVESTMENT 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 CDL INVESTMENT and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDL INVESTMENT and China Communications Services, you can compare the effects of market volatilities on CDL INVESTMENT 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 CDL INVESTMENT with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and China Communications.
Diversification Opportunities for CDL INVESTMENT and China Communications
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CDL and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and China Communications go up and down completely randomly.
Pair Corralation between CDL INVESTMENT and China Communications
Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 1.37 times more return on investment than China Communications. However, CDL INVESTMENT is 1.37 times more volatile than China Communications Services. It trades about 0.01 of its potential returns per unit of risk. China Communications Services is currently generating about -0.06 per unit of risk. If you would invest 43.00 in CDL INVESTMENT on October 17, 2024 and sell it today you would earn a total of 0.00 from holding CDL INVESTMENT or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDL INVESTMENT vs. China Communications Services
Performance |
| Timeline |
| CDL INVESTMENT |
| China Communications |
CDL INVESTMENT and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDL INVESTMENT and China Communications
The main advantage of trading using opposite CDL INVESTMENT and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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.| CDL INVESTMENT vs. Meta Financial Group | CDL INVESTMENT vs. Taiwan Semiconductor Manufacturing | CDL INVESTMENT vs. Hua Hong Semiconductor | CDL INVESTMENT vs. PNC Financial Services |
| China Communications vs. CDL INVESTMENT | China Communications vs. ECHO INVESTMENT ZY | China Communications vs. DIVERSIFIED ROYALTY | China Communications vs. Corsair Gaming |
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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