Correlation Between CENTRAL PUERTO and China Communications
Can any of the company-specific risk be diversified away by investing in both CENTRAL PUERTO 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 CENTRAL PUERTO and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTRAL PUERTO ADR1 and China Communications Services, you can compare the effects of market volatilities on CENTRAL PUERTO 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 CENTRAL PUERTO with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTRAL PUERTO and China Communications.
Diversification Opportunities for CENTRAL PUERTO and China Communications
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CENTRAL and China is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CENTRAL PUERTO ADR1 and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and CENTRAL PUERTO 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 CENTRAL PUERTO ADR1 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 CENTRAL PUERTO i.e., CENTRAL PUERTO and China Communications go up and down completely randomly.
Pair Corralation between CENTRAL PUERTO and China Communications
Assuming the 90 days trading horizon CENTRAL PUERTO ADR1 is expected to generate 2.0 times more return on investment than China Communications. However, CENTRAL PUERTO is 2.0 times more volatile than China Communications Services. It trades about 0.39 of its potential returns per unit of risk. China Communications Services is currently generating about 0.27 per unit of risk. If you would invest 1,095 in CENTRAL PUERTO ADR1 on September 13, 2024 and sell it today you would earn a total of 285.00 from holding CENTRAL PUERTO ADR1 or generate 26.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTRAL PUERTO ADR1 vs. China Communications Services
Performance |
| Timeline |
| CENTRAL PUERTO ADR1 |
| China Communications |
CENTRAL PUERTO and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTRAL PUERTO and China Communications
The main advantage of trading using opposite CENTRAL PUERTO and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTRAL PUERTO 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.| CENTRAL PUERTO vs. Chiba Bank | CENTRAL PUERTO vs. Hitachi Construction Machinery | CENTRAL PUERTO vs. Ameriprise Financial | CENTRAL PUERTO vs. HYDROFARM HLD GRP |
| China Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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