Correlation Between CRRC and East Japan
Can any of the company-specific risk be diversified away by investing in both CRRC and East Japan 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 CRRC and East Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRRC Limited and East Japan Railway, you can compare the effects of market volatilities on CRRC and East Japan 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 CRRC with a short position of East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRRC and East Japan.
Diversification Opportunities for CRRC and East Japan
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between CRRC and East is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CRRC Limited and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway and CRRC 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 CRRC Limited are associated (or correlated) with East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of CRRC i.e., CRRC and East Japan go up and down completely randomly.
Pair Corralation between CRRC and East Japan
If you would invest 61.00 in CRRC Limited on September 27, 2024 and sell it today you would earn a total of 0.00 from holding CRRC Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CRRC Limited vs. East Japan Railway
Performance |
| Timeline |
| CRRC Limited |
| East Japan Railway |
CRRC and East Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CRRC and East Japan
The main advantage of trading using opposite CRRC and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRRC position performs unexpectedly, East Japan 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 East Japan will offset losses from the drop in East Japan's long position.| CRRC vs. Canadian National Railway | CRRC vs. MTR Limited | CRRC vs. Central Japan Railway | CRRC vs. East Japan Railway |
| East Japan vs. Canadian National Railway | East Japan vs. MTR Limited | East Japan vs. CRRC Limited | East Japan vs. Central Japan Railway |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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