Correlation Between CHINA CONBANK and Tri Pointe
Can any of the company-specific risk be diversified away by investing in both CHINA CONBANK and Tri Pointe 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 Tri Pointe 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 Tri Pointe Homes, you can compare the effects of market volatilities on CHINA CONBANK and Tri Pointe 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 Tri Pointe. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CONBANK and Tri Pointe.
Diversification Opportunities for CHINA CONBANK and Tri Pointe
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHINA and Tri is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Tri Pointe Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Pointe Homes 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 Tri Pointe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Pointe Homes has no effect on the direction of CHINA CONBANK i.e., CHINA CONBANK and Tri Pointe go up and down completely randomly.
Pair Corralation between CHINA CONBANK and Tri Pointe
Assuming the 90 days trading horizon CHINA CONBANK is expected to generate 1.53 times less return on investment than Tri Pointe. But when comparing it to its historical volatility, CHINA BANK ADR20 is 1.05 times less risky than Tri Pointe. It trades about 0.06 of its potential returns per unit of risk. Tri Pointe Homes is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,730 in Tri Pointe Homes on September 12, 2024 and sell it today you would earn a total of 2,170 from holding Tri Pointe Homes or generate 125.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA BANK ADR20 vs. Tri Pointe Homes
Performance |
| Timeline |
| CHINA BANK ADR20 |
| Tri Pointe Homes |
CHINA CONBANK and Tri Pointe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA CONBANK and Tri Pointe
The main advantage of trading using opposite CHINA CONBANK and Tri Pointe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA CONBANK position performs unexpectedly, Tri Pointe 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 Tri Pointe will offset losses from the drop in Tri Pointe's long position.| CHINA CONBANK vs. AGRICULTBK HADR25 YC | CHINA CONBANK vs. The Toronto Dominion Bank | CHINA CONBANK vs. Superior Plus Corp | CHINA CONBANK vs. SIVERS SEMICONDUCTORS AB |
| Tri Pointe vs. Lennar | Tri Pointe vs. Sekisui Chemical Co | Tri Pointe vs. Superior Plus Corp | Tri Pointe vs. SIVERS SEMICONDUCTORS AB |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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