Correlation Between CHINA STATE and KEISEI EL
Can any of the company-specific risk be diversified away by investing in both CHINA STATE and KEISEI EL 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 STATE and KEISEI EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA STATE STRU and KEISEI EL RAILWAY, you can compare the effects of market volatilities on CHINA STATE and KEISEI EL 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 STATE with a short position of KEISEI EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA STATE and KEISEI EL.
Diversification Opportunities for CHINA STATE and KEISEI EL
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHINA and KEISEI is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CHINA STATE STRU and KEISEI EL RAILWAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEISEI EL RAILWAY and CHINA STATE 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 STATE STRU are associated (or correlated) with KEISEI EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEISEI EL RAILWAY has no effect on the direction of CHINA STATE i.e., CHINA STATE and KEISEI EL go up and down completely randomly.
Pair Corralation between CHINA STATE and KEISEI EL
Assuming the 90 days trading horizon CHINA STATE STRU is expected to generate 0.73 times more return on investment than KEISEI EL. However, CHINA STATE STRU is 1.38 times less risky than KEISEI EL. It trades about 0.1 of its potential returns per unit of risk. KEISEI EL RAILWAY is currently generating about 0.05 per unit of risk. If you would invest 33.00 in CHINA STATE STRU on October 13, 2024 and sell it today you would earn a total of 102.00 from holding CHINA STATE STRU or generate 309.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA STATE STRU vs. KEISEI EL RAILWAY
Performance |
| Timeline |
| CHINA STATE STRU |
| KEISEI EL RAILWAY |
CHINA STATE and KEISEI EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA STATE and KEISEI EL
The main advantage of trading using opposite CHINA STATE and KEISEI EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA STATE position performs unexpectedly, KEISEI EL 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 KEISEI EL will offset losses from the drop in KEISEI EL's long position.| CHINA STATE vs. Darden Restaurants | CHINA STATE vs. Summit Hotel Properties | CHINA STATE vs. British American Tobacco | CHINA STATE vs. DALATA HOTEL |
| KEISEI EL vs. Jacquet Metal Service | KEISEI EL vs. Iridium Communications | KEISEI EL vs. GRIFFIN MINING LTD | KEISEI EL vs. Harmony Gold Mining |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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