Correlation Between CHINA EDUCATION and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on CHINA EDUCATION and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Arrow Electronics.
Diversification Opportunities for CHINA EDUCATION and Arrow Electronics
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and Arrow is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Arrow Electronics go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Arrow Electronics
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to under-perform the Arrow Electronics. In addition to that, CHINA EDUCATION is 1.79 times more volatile than Arrow Electronics. It trades about -0.22 of its total potential returns per unit of risk. Arrow Electronics is currently generating about 0.01 per unit of volatility. If you would invest 11,100 in Arrow Electronics on September 22, 2024 and sell it today you would earn a total of 0.00 from holding Arrow Electronics or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. Arrow Electronics
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Arrow Electronics |
CHINA EDUCATION and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Arrow Electronics
The main advantage of trading using opposite CHINA EDUCATION and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| CHINA EDUCATION vs. Sumitomo Mitsui Construction | CHINA EDUCATION vs. ALEFARM BREWING DK 05 | CHINA EDUCATION vs. ScanSource | CHINA EDUCATION vs. Entravision Communications |
| Arrow Electronics vs. MAVEN WIRELESS SWEDEN | Arrow Electronics vs. Virtus Investment Partners | Arrow Electronics vs. New Residential Investment | Arrow Electronics vs. NURAN WIRELESS INC |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |