Correlation Between Chongqing Machinery and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and ECHO INVESTMENT 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 ECHO INVESTMENT 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 ECHO INVESTMENT ZY, you can compare the effects of market volatilities on Chongqing Machinery and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and ECHO INVESTMENT.
Diversification Opportunities for Chongqing Machinery and ECHO INVESTMENT
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chongqing and ECHO is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between Chongqing Machinery and ECHO INVESTMENT
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 6.05 times more return on investment than ECHO INVESTMENT. However, Chongqing Machinery is 6.05 times more volatile than ECHO INVESTMENT ZY. It trades about 0.03 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about -0.17 per unit of risk. If you would invest 7.85 in Chongqing Machinery Electric on November 9, 2024 and sell it today you would lose (0.55) from holding Chongqing Machinery Electric or give up 7.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| Chongqing Machinery |
| ECHO INVESTMENT ZY |
Chongqing Machinery and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and ECHO INVESTMENT
The main advantage of trading using opposite Chongqing Machinery and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| Chongqing Machinery vs. CORNISH METALS INC | Chongqing Machinery vs. Zijin Mining Group | Chongqing Machinery vs. Ringmetall SE | Chongqing Machinery vs. Jacquet Metal Service |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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