Correlation Between Chongqing Machinery and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Aedas Homes 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 Chongqing Machinery and Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and Aedas Homes SA, you can compare the effects of market volatilities on Chongqing Machinery and Aedas Homes 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 Chongqing Machinery with a short position of Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Aedas Homes.
Diversification Opportunities for Chongqing Machinery and Aedas Homes
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Aedas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA and Chongqing Machinery 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 Chongqing Machinery Electric are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Aedas Homes go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Aedas Homes
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 3.56 times more return on investment than Aedas Homes. However, Chongqing Machinery is 3.56 times more volatile than Aedas Homes SA. It trades about 0.07 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.12 per unit of risk. If you would invest 2.34 in Chongqing Machinery Electric on September 2, 2024 and sell it today you would earn a total of 5.01 from holding Chongqing Machinery Electric or generate 214.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Aedas Homes SA
Performance |
| Timeline |
| Chongqing Machinery |
| Aedas Homes SA |
Chongqing Machinery and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Aedas Homes
The main advantage of trading using opposite Chongqing Machinery and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Chongqing Machinery vs. ABB | Chongqing Machinery vs. Emerson Electric Co | Chongqing Machinery vs. Superior Plus Corp | Chongqing Machinery vs. NMI Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |