Correlation Between Chongqing Machinery and MSCI
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and MSCI 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 MSCI 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 MSCI Inc, you can compare the effects of market volatilities on Chongqing Machinery and MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and MSCI.
Diversification Opportunities for Chongqing Machinery and MSCI
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and MSCI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and MSCI go up and down completely randomly.
Pair Corralation between Chongqing Machinery and MSCI
Assuming the 90 days horizon Chongqing Machinery is expected to generate 15.75 times less return on investment than MSCI. In addition to that, Chongqing Machinery is 2.67 times more volatile than MSCI Inc. It trades about 0.01 of its total potential returns per unit of risk. MSCI Inc is currently generating about 0.23 per unit of volatility. If you would invest 56,463 in MSCI Inc on September 14, 2024 and sell it today you would earn a total of 3,277 from holding MSCI Inc or generate 5.8% 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. MSCI Inc
Performance |
| Timeline |
| Chongqing Machinery |
| MSCI Inc |
Chongqing Machinery and MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and MSCI
The main advantage of trading using opposite Chongqing Machinery and MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, MSCI 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 MSCI will offset losses from the drop in MSCI's long position.| Chongqing Machinery vs. TRAVEL LEISURE DL 01 | Chongqing Machinery vs. Air Transport Services | Chongqing Machinery vs. AIR PRODCHEMICALS | Chongqing Machinery vs. Lifeway Foods |
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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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