Correlation Between Chongqing Machinery and LANDSEA GREEN
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and LANDSEA GREEN 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 LANDSEA GREEN 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 LANDSEA GREEN MANAGEMENT, you can compare the effects of market volatilities on Chongqing Machinery and LANDSEA GREEN 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 LANDSEA GREEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and LANDSEA GREEN.
Diversification Opportunities for Chongqing Machinery and LANDSEA GREEN
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chongqing and LANDSEA is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and LANDSEA GREEN MANAGEMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA GREEN MANAGEMENT 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 LANDSEA GREEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA GREEN MANAGEMENT has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and LANDSEA GREEN go up and down completely randomly.
Pair Corralation between Chongqing Machinery and LANDSEA GREEN
Assuming the 90 days horizon Chongqing Machinery is expected to generate 71.63 times less return on investment than LANDSEA GREEN. But when comparing it to its historical volatility, Chongqing Machinery Electric is 29.08 times less risky than LANDSEA GREEN. It trades about 0.06 of its potential returns per unit of risk. LANDSEA GREEN MANAGEMENT is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.10 in LANDSEA GREEN MANAGEMENT on November 3, 2024 and sell it today you would earn a total of 0.00 from holding LANDSEA GREEN MANAGEMENT or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. LANDSEA GREEN MANAGEMENT
Performance |
| Timeline |
| Chongqing Machinery |
| LANDSEA GREEN MANAGEMENT |
Chongqing Machinery and LANDSEA GREEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and LANDSEA GREEN
The main advantage of trading using opposite Chongqing Machinery and LANDSEA GREEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, LANDSEA GREEN 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 LANDSEA GREEN will offset losses from the drop in LANDSEA GREEN's long position.| Chongqing Machinery vs. Samsung Electronics Co | Chongqing Machinery vs. STORE ELECTRONIC | Chongqing Machinery vs. Endeavour Mining PLC | Chongqing Machinery vs. STMicroelectronics NV |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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