Correlation Between PURE FOODS and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both PURE FOODS and CHINA EDUCATION 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 PURE FOODS and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PURE FOODS TASMANIA and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on PURE FOODS and CHINA EDUCATION 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 PURE FOODS with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURE FOODS and CHINA EDUCATION.
Diversification Opportunities for PURE FOODS and CHINA EDUCATION
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PURE and CHINA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PURE FOODS TASMANIA and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and PURE FOODS 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 PURE FOODS TASMANIA are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of PURE FOODS i.e., PURE FOODS and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between PURE FOODS and CHINA EDUCATION
Assuming the 90 days trading horizon PURE FOODS TASMANIA is expected to generate 11.35 times more return on investment than CHINA EDUCATION. However, PURE FOODS is 11.35 times more volatile than CHINA EDUCATION GROUP. It trades about 0.06 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.03 per unit of risk. If you would invest 9.10 in PURE FOODS TASMANIA on October 29, 2024 and sell it today you would lose (8.05) from holding PURE FOODS TASMANIA or give up 88.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PURE FOODS TASMANIA vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| PURE FOODS TASMANIA |
| CHINA EDUCATION GROUP |
PURE FOODS and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PURE FOODS and CHINA EDUCATION
The main advantage of trading using opposite PURE FOODS and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PURE FOODS position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| PURE FOODS vs. GALENA MINING LTD | PURE FOODS vs. Yanzhou Coal Mining | PURE FOODS vs. CLEAN ENERGY FUELS | PURE FOODS vs. Cleanaway Waste Management |
| CHINA EDUCATION vs. AIR PRODCHEMICALS | CHINA EDUCATION vs. Cal Maine Foods | CHINA EDUCATION vs. PURE FOODS TASMANIA | CHINA EDUCATION vs. Carnegie Clean Energy |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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