Correlation Between CRRCLimited and MTRLimited
Can any of the company-specific risk be diversified away by investing in both CRRCLimited and MTRLimited 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 CRRCLimited and MTRLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRRC Limited and MTR Limited, you can compare the effects of market volatilities on CRRCLimited and MTRLimited 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 CRRCLimited with a short position of MTRLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRRCLimited and MTRLimited.
Diversification Opportunities for CRRCLimited and MTRLimited
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CRRCLimited and MTRLimited is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CRRC Limited and MTR Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTR Limited and CRRCLimited 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 MTRLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTR Limited has no effect on the direction of CRRCLimited i.e., CRRCLimited and MTRLimited go up and down completely randomly.
Pair Corralation between CRRCLimited and MTRLimited
Assuming the 90 days horizon CRRC Limited is expected to generate 1.83 times more return on investment than MTRLimited. However, CRRCLimited is 1.83 times more volatile than MTR Limited. It trades about 0.08 of its potential returns per unit of risk. MTR Limited is currently generating about 0.04 per unit of risk. If you would invest 21.00 in CRRC Limited on August 31, 2024 and sell it today you would earn a total of 40.00 from holding CRRC Limited or generate 190.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CRRC Limited vs. MTR Limited
Performance |
| Timeline |
| CRRC Limited |
| MTR Limited |
CRRCLimited and MTRLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CRRCLimited and MTRLimited
The main advantage of trading using opposite CRRCLimited and MTRLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRRCLimited position performs unexpectedly, MTRLimited 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 MTRLimited will offset losses from the drop in MTRLimited's long position.| CRRCLimited vs. Ribbon Communications | CRRCLimited vs. Canadian Utilities Limited | CRRCLimited vs. Gamma Communications plc | CRRCLimited vs. SOLSTAD OFFSHORE NK |
| MTRLimited vs. Union Pacific | MTRLimited vs. Superior Plus Corp | MTRLimited vs. NMI Holdings | MTRLimited vs. Origin Agritech |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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