Correlation Between China Clean and United States
Can any of the company-specific risk be diversified away by investing in both China Clean and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on China Clean and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Clean and United States.
Diversification Opportunities for China Clean and United States
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Clean Energy and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of China Clean i.e., China Clean and United States go up and down completely randomly.
Pair Corralation between China Clean and United States
If you would invest 3,099 in United States Steel on August 29, 2024 and sell it today you would earn a total of 946.00 from holding United States Steel or generate 30.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Clean Energy vs. United States Steel
Performance |
| Timeline |
| China Clean Energy |
| United States Steel |
China Clean and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Clean and United States
The main advantage of trading using opposite China Clean and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Clean position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| China Clean vs. Akzo Nobel NV | China Clean vs. Avoca LLC | China Clean vs. Arkema SA ADR | China Clean vs. HUMANA INC |
| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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