Correlation Between Chongqing Machinery and Bank Of
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Bank Of 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 Bank Of 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 The Bank of, you can compare the effects of market volatilities on Chongqing Machinery and Bank Of 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 Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Bank Of.
Diversification Opportunities for Chongqing Machinery and Bank Of
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank 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 Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Bank Of go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Bank Of
Assuming the 90 days horizon Chongqing Machinery Electric is expected to under-perform the Bank Of. In addition to that, Chongqing Machinery is 2.6 times more volatile than The Bank of. It trades about -0.01 of its total potential returns per unit of risk. The Bank of is currently generating about 0.15 per unit of volatility. If you would invest 7,347 in The Bank of on September 13, 2024 and sell it today you would earn a total of 277.00 from holding The Bank of or generate 3.77% 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. The Bank of
Performance |
| Timeline |
| Chongqing Machinery |
| The Bank |
Chongqing Machinery and Bank Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Bank Of
The main advantage of trading using opposite Chongqing Machinery and Bank Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Bank Of 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 Bank Of will offset losses from the drop in Bank Of'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 |
| Bank Of vs. Hanison Construction Holdings | Bank Of vs. LANDSEA GREEN MANAGEMENT | Bank Of vs. Chongqing Machinery Electric | Bank Of vs. ALEFARM BREWING DK 05 |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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