Correlation Between China Clean and Alvarion
Can any of the company-specific risk be diversified away by investing in both China Clean and Alvarion 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 Clean and Alvarion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Clean Energy and Alvarion, you can compare the effects of market volatilities on China Clean and Alvarion 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 Clean with a short position of Alvarion. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Clean and Alvarion.
Diversification Opportunities for China Clean and Alvarion
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between China and Alvarion is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding China Clean Energy and Alvarion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvarion and China Clean 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 Clean Energy are associated (or correlated) with Alvarion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvarion has no effect on the direction of China Clean i.e., China Clean and Alvarion go up and down completely randomly.
Pair Corralation between China Clean and Alvarion
If you would invest 0.01 in Alvarion on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Alvarion or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
China Clean Energy vs. Alvarion
Performance |
| Timeline |
| China Clean Energy |
| Alvarion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Clean and Alvarion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Clean and Alvarion
The main advantage of trading using opposite China Clean and Alvarion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Clean position performs unexpectedly, Alvarion 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 Alvarion will offset losses from the drop in Alvarion's long position.| China Clean vs. Sherwin Williams Co | China Clean vs. Air Liquide SA | China Clean vs. LAir Liquide SA | China Clean vs. Air Products and |
| Alvarion vs. China Clean Energy | Alvarion vs. NiSource | Alvarion vs. Verde Clean Fuels | Alvarion vs. Empresa Distribuidora y |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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