Correlation Between Chiba Bank and MedMira
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and MedMira 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 Chiba Bank and MedMira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and MedMira, you can compare the effects of market volatilities on Chiba Bank and MedMira 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 Chiba Bank with a short position of MedMira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and MedMira.
Diversification Opportunities for Chiba Bank and MedMira
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chiba and MedMira is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira and Chiba Bank 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 Chiba Bank are associated (or correlated) with MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of Chiba Bank i.e., Chiba Bank and MedMira go up and down completely randomly.
Pair Corralation between Chiba Bank and MedMira
Assuming the 90 days horizon Chiba Bank is expected to generate 2.04 times less return on investment than MedMira. But when comparing it to its historical volatility, Chiba Bank is 2.68 times less risky than MedMira. It trades about 0.06 of its potential returns per unit of risk. MedMira is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.75 in MedMira on September 2, 2024 and sell it today you would earn a total of 1.15 from holding MedMira or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. MedMira
Performance |
| Timeline |
| Chiba Bank |
| MedMira |
Chiba Bank and MedMira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and MedMira
The main advantage of trading using opposite Chiba Bank and MedMira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, MedMira 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 MedMira will offset losses from the drop in MedMira's long position.| Chiba Bank vs. Platinum Investment Management | Chiba Bank vs. Waste Management | Chiba Bank vs. CeoTronics AG | Chiba Bank vs. Elmos Semiconductor SE |
| MedMira vs. Marie Brizard Wine | MedMira vs. Apollo Investment Corp | MedMira vs. NIPPON STEEL SPADR | MedMira vs. Genco Shipping Trading |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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