Correlation Between China Overseas and Alliance Global
Can any of the company-specific risk be diversified away by investing in both China Overseas and Alliance Global 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 Overseas and Alliance Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Overseas Land and Alliance Global Group, you can compare the effects of market volatilities on China Overseas and Alliance Global 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 Overseas with a short position of Alliance Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and Alliance Global.
Diversification Opportunities for China Overseas and Alliance Global
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Alliance is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and China Overseas 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 Overseas Land are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of China Overseas i.e., China Overseas and Alliance Global go up and down completely randomly.
Pair Corralation between China Overseas and Alliance Global
Assuming the 90 days horizon China Overseas Land is expected to generate 1.95 times more return on investment than Alliance Global. However, China Overseas is 1.95 times more volatile than Alliance Global Group. It trades about 0.01 of its potential returns per unit of risk. Alliance Global Group is currently generating about -0.01 per unit of risk. If you would invest 856.00 in China Overseas Land on August 27, 2024 and sell it today you would lose (15.00) from holding China Overseas Land or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
China Overseas Land vs. Alliance Global Group
Performance |
| Timeline |
| China Overseas Land |
| Alliance Global Group |
China Overseas and Alliance Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and Alliance Global
The main advantage of trading using opposite China Overseas and Alliance Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas position performs unexpectedly, Alliance Global 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 Alliance Global will offset losses from the drop in Alliance Global's long position.The idea behind China Overseas Land and Alliance Global Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Alliance Global vs. Alliance Recovery | Alliance Global vs. Ayala | Alliance Global vs. Alaska Power Telephone | Alliance Global vs. RCABS Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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