Correlation Between CHINA EDUCATION and Summit Materials
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Summit Materials 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 CHINA EDUCATION and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and Summit Materials, you can compare the effects of market volatilities on CHINA EDUCATION and Summit Materials 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 CHINA EDUCATION with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Summit Materials.
Diversification Opportunities for CHINA EDUCATION and Summit Materials
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHINA and Summit is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and CHINA EDUCATION 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 CHINA EDUCATION GROUP are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Summit Materials go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Summit Materials
Assuming the 90 days horizon CHINA EDUCATION is expected to generate 1.2 times less return on investment than Summit Materials. In addition to that, CHINA EDUCATION is 2.0 times more volatile than Summit Materials. It trades about 0.02 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of volatility. If you would invest 2,980 in Summit Materials on November 6, 2024 and sell it today you would earn a total of 2,020 from holding Summit Materials or generate 67.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. Summit Materials
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Summit Materials |
CHINA EDUCATION and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Summit Materials
The main advantage of trading using opposite CHINA EDUCATION and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| CHINA EDUCATION vs. CeoTronics AG | CHINA EDUCATION vs. Sims Metal Management | CHINA EDUCATION vs. Scientific Games | CHINA EDUCATION vs. CLOVER HEALTH INV |
| Summit Materials vs. Pentair plc | Summit Materials vs. CarsalesCom | Summit Materials vs. Commercial Vehicle Group | Summit Materials vs. Air New Zealand |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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