Correlation Between CHINA CONBANK and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both CHINA CONBANK and Fortune Brands 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 CONBANK and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA BANK ADR20 and Fortune Brands Home, you can compare the effects of market volatilities on CHINA CONBANK and Fortune Brands 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 CONBANK with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CONBANK and Fortune Brands.
Diversification Opportunities for CHINA CONBANK and Fortune Brands
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHINA and Fortune is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and CHINA CONBANK 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 BANK ADR20 are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of CHINA CONBANK i.e., CHINA CONBANK and Fortune Brands go up and down completely randomly.
Pair Corralation between CHINA CONBANK and Fortune Brands
Assuming the 90 days trading horizon CHINA BANK ADR20 is expected to generate 0.98 times more return on investment than Fortune Brands. However, CHINA BANK ADR20 is 1.02 times less risky than Fortune Brands. It trades about 0.1 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.12 per unit of risk. If you would invest 1,319 in CHINA BANK ADR20 on December 25, 2024 and sell it today you would earn a total of 281.00 from holding CHINA BANK ADR20 or generate 21.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA BANK ADR20 vs. Fortune Brands Home
Performance |
| Timeline |
| CHINA BANK ADR20 |
| Fortune Brands Home |
CHINA CONBANK and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA CONBANK and Fortune Brands
The main advantage of trading using opposite CHINA CONBANK and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA CONBANK position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| CHINA CONBANK vs. InPlay Oil Corp | CHINA CONBANK vs. Columbia Sportswear | CHINA CONBANK vs. InterContinental Hotels Group | CHINA CONBANK vs. Emperor Entertainment Hotel |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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