Correlation Between CHINA EDUCATION and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and THORNEY TECHS 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 THORNEY TECHS 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 THORNEY TECHS LTD, you can compare the effects of market volatilities on CHINA EDUCATION and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and THORNEY TECHS.
Diversification Opportunities for CHINA EDUCATION and THORNEY TECHS
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and THORNEY is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and THORNEY TECHS go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and THORNEY TECHS
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 0.66 times more return on investment than THORNEY TECHS. However, CHINA EDUCATION GROUP is 1.52 times less risky than THORNEY TECHS. It trades about 0.06 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about -0.03 per unit of risk. If you would invest 41.00 in CHINA EDUCATION GROUP on November 3, 2024 and sell it today you would earn a total of 1.00 from holding CHINA EDUCATION GROUP or generate 2.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
CHINA EDUCATION GROUP vs. THORNEY TECHS LTD
Performance |
Timeline |
CHINA EDUCATION GROUP |
THORNEY TECHS LTD |
CHINA EDUCATION and THORNEY TECHS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHINA EDUCATION and THORNEY TECHS
The main advantage of trading using opposite CHINA EDUCATION and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.CHINA EDUCATION vs. ONWARD MEDICAL BV | CHINA EDUCATION vs. WESANA HEALTH HOLD | CHINA EDUCATION vs. Siemens Healthineers AG | CHINA EDUCATION vs. CARDINAL HEALTH |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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