Correlation Between Chongqing Machinery and Pampa Energa
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Pampa Energa 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 Pampa Energa 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 Pampa Energa SA, you can compare the effects of market volatilities on Chongqing Machinery and Pampa Energa 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 Pampa Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Pampa Energa.
Diversification Opportunities for Chongqing Machinery and Pampa Energa
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Pampa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Pampa Energa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energa SA 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 Pampa Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energa SA has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Pampa Energa go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Pampa Energa
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 1.98 times more return on investment than Pampa Energa. However, Chongqing Machinery is 1.98 times more volatile than Pampa Energa SA. It trades about 0.07 of its potential returns per unit of risk. Pampa Energa SA is currently generating about 0.09 per unit of risk. If you would invest 2.12 in Chongqing Machinery Electric on August 30, 2024 and sell it today you would earn a total of 5.33 from holding Chongqing Machinery Electric or generate 251.42% 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. Pampa Energa SA
Performance |
| Timeline |
| Chongqing Machinery |
| Pampa Energa SA |
Chongqing Machinery and Pampa Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Pampa Energa
The main advantage of trading using opposite Chongqing Machinery and Pampa Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Pampa Energa 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 Pampa Energa will offset losses from the drop in Pampa Energa's long position.| Chongqing Machinery vs. Gold Road Resources | Chongqing Machinery vs. Texas Roadhouse | Chongqing Machinery vs. EVS Broadcast Equipment | Chongqing Machinery vs. Luckin Coffee |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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