Correlation Between China Tontine and CBOE Low

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both China Tontine and CBOE Low 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 Tontine and CBOE Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Tontine Wines and CBOE Low Volatility, you can compare the effects of market volatilities on China Tontine and CBOE Low 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 Tontine with a short position of CBOE Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tontine and CBOE Low.

Diversification Opportunities for China Tontine and CBOE Low

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between China and CBOE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines and CBOE Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBOE Low Volatility and China Tontine 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 Tontine Wines are associated (or correlated) with CBOE Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBOE Low Volatility has no effect on the direction of China Tontine i.e., China Tontine and CBOE Low go up and down completely randomly.
    Optimize

Pair Corralation between China Tontine and CBOE Low

Assuming the 90 days horizon China Tontine Wines is expected to generate 157.62 times more return on investment than CBOE Low. However, China Tontine is 157.62 times more volatile than CBOE Low Volatility. It trades about 0.09 of its potential returns per unit of risk. CBOE Low Volatility is currently generating about 0.11 per unit of risk. If you would invest  1.50  in China Tontine Wines on September 14, 2024 and sell it today you would earn a total of  5.60  from holding China Tontine Wines or generate 373.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.39%
ValuesDaily Returns

China Tontine Wines  vs.  CBOE Low Volatility

 Performance 
       Timeline  

China Tontine and CBOE Low Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Tontine and CBOE Low

The main advantage of trading using opposite China Tontine and CBOE Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Tontine position performs unexpectedly, CBOE Low 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 CBOE Low will offset losses from the drop in CBOE Low's long position.
The idea behind China Tontine Wines and CBOE Low Volatility 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.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

Other Complementary Tools

Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Transaction History
View history of all your transactions and understand their impact on performance
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities