Correlation Between Chiba Bank and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and GEELY AUTOMOBILE, you can compare the effects of market volatilities on Chiba Bank and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and GEELY AUTOMOBILE.
Diversification Opportunities for Chiba Bank and GEELY AUTOMOBILE
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chiba and GEELY is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Chiba Bank i.e., Chiba Bank and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Chiba Bank and GEELY AUTOMOBILE
Assuming the 90 days horizon Chiba Bank is expected to generate 0.96 times more return on investment than GEELY AUTOMOBILE. However, Chiba Bank is 1.04 times less risky than GEELY AUTOMOBILE. It trades about 0.27 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.06 per unit of risk. If you would invest 745.00 in Chiba Bank on November 4, 2024 and sell it today you would earn a total of 65.00 from holding Chiba Bank or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| Chiba Bank |
| GEELY AUTOMOBILE |
Chiba Bank and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and GEELY AUTOMOBILE
The main advantage of trading using opposite Chiba Bank and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| Chiba Bank vs. CVR Medical Corp | Chiba Bank vs. Nippon Light Metal | Chiba Bank vs. Inspire Medical Systems | Chiba Bank vs. PARKEN Sport Entertainment |
| GEELY AUTOMOBILE vs. Daido Steel Co | GEELY AUTOMOBILE vs. Delta Electronics Public | GEELY AUTOMOBILE vs. COSMOSTEEL HLDGS | GEELY AUTOMOBILE vs. Samsung Electronics Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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