Correlation Between Chongqing Machinery and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Gamma Communications 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 Gamma Communications 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 Gamma Communications plc, you can compare the effects of market volatilities on Chongqing Machinery and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Gamma Communications.
Diversification Opportunities for Chongqing Machinery and Gamma Communications
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chongqing and Gamma is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Gamma Communications go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Gamma Communications
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 1.54 times more return on investment than Gamma Communications. However, Chongqing Machinery is 1.54 times more volatile than Gamma Communications plc. It trades about 0.07 of its potential returns per unit of risk. Gamma Communications plc is currently generating about 0.09 per unit of risk. If you would invest 7.15 in Chongqing Machinery Electric on September 3, 2024 and sell it today you would earn a total of 0.20 from holding Chongqing Machinery Electric or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Gamma Communications plc
Performance |
| Timeline |
| Chongqing Machinery |
| Gamma Communications plc |
Chongqing Machinery and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Gamma Communications
The main advantage of trading using opposite Chongqing Machinery and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Chongqing Machinery vs. Geely Automobile Holdings | Chongqing Machinery vs. TOWNSQUARE MEDIA INC | Chongqing Machinery vs. JD SPORTS FASH | Chongqing Machinery vs. XLMedia PLC |
| Gamma Communications vs. Hemisphere Energy Corp | Gamma Communications vs. NetSol Technologies | Gamma Communications vs. LG Display Co | Gamma Communications vs. Citic Telecom International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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