Correlation Between CHINA EDUCATION and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and COSTCO WHOLESALE 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 COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on CHINA EDUCATION and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and COSTCO WHOLESALE.
Diversification Opportunities for CHINA EDUCATION and COSTCO WHOLESALE
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and COSTCO is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and COSTCO WHOLESALE
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 3.08 times more return on investment than COSTCO WHOLESALE. However, CHINA EDUCATION is 3.08 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.05 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.14 per unit of risk. If you would invest 32.00 in CHINA EDUCATION GROUP on September 15, 2024 and sell it today you would earn a total of 12.00 from holding CHINA EDUCATION GROUP or generate 37.5% 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. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| COSTCO WHOLESALE CDR |
CHINA EDUCATION and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and COSTCO WHOLESALE
The main advantage of trading using opposite CHINA EDUCATION and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
| COSTCO WHOLESALE vs. AXWAY SOFTWARE EO | COSTCO WHOLESALE vs. CHINA EDUCATION GROUP | COSTCO WHOLESALE vs. VITEC SOFTWARE GROUP | COSTCO WHOLESALE vs. Alfa Financial Software |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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