Correlation Between Chongqing Machinery and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and SWISS WATER 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on Chongqing Machinery and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and SWISS WATER.
Diversification Opportunities for Chongqing Machinery and SWISS WATER
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and SWISS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and SWISS WATER go up and down completely randomly.
Pair Corralation between Chongqing Machinery and SWISS WATER
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 1.43 times more return on investment than SWISS WATER. However, Chongqing Machinery is 1.43 times more volatile than SWISS WATER DECAFFCOFFEE. It trades about -0.01 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.09 per unit of risk. If you would invest 7.70 in Chongqing Machinery Electric on September 13, 2024 and sell it today you would lose (0.15) from holding Chongqing Machinery Electric or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| Chongqing Machinery |
| SWISS WATER DECAFFCOFFEE |
Chongqing Machinery and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and SWISS WATER
The main advantage of trading using opposite Chongqing Machinery and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| Chongqing Machinery vs. Schneider Electric SE | Chongqing Machinery vs. Superior Plus Corp | Chongqing Machinery vs. SIVERS SEMICONDUCTORS AB | Chongqing Machinery vs. Norsk Hydro ASA |
| SWISS WATER vs. Japan Post Insurance | SWISS WATER vs. CAL MAINE FOODS | SWISS WATER vs. REVO INSURANCE SPA | SWISS WATER vs. JJ SNACK FOODS |
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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