Correlation Between Chongqing Machinery and CIFI Holdings
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and CIFI Holdings 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 CIFI Holdings 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 CIFI Holdings Co, you can compare the effects of market volatilities on Chongqing Machinery and CIFI Holdings 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 CIFI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and CIFI Holdings.
Diversification Opportunities for Chongqing Machinery and CIFI Holdings
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and CIFI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and CIFI Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIFI Holdings 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 CIFI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIFI Holdings has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and CIFI Holdings go up and down completely randomly.
Pair Corralation between Chongqing Machinery and CIFI Holdings
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 0.54 times more return on investment than CIFI Holdings. However, Chongqing Machinery Electric is 1.86 times less risky than CIFI Holdings. It trades about 0.07 of its potential returns per unit of risk. CIFI Holdings Co is currently generating about 0.03 per unit of risk. If you would invest 2.08 in Chongqing Machinery Electric on September 14, 2024 and sell it today you would earn a total of 5.62 from holding Chongqing Machinery Electric or generate 270.19% 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. CIFI Holdings Co
Performance |
| Timeline |
| Chongqing Machinery |
| CIFI Holdings |
Chongqing Machinery and CIFI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and CIFI Holdings
The main advantage of trading using opposite Chongqing Machinery and CIFI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, CIFI Holdings 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 CIFI Holdings will offset losses from the drop in CIFI Holdings' 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 |
| CIFI Holdings vs. GEELY AUTOMOBILE | CIFI Holdings vs. North American Construction | CIFI Holdings vs. TITAN MACHINERY | CIFI Holdings vs. Chongqing Machinery Electric |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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