Correlation Between Chongqing Machinery and Casio Computer
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Casio Computer 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 Casio Computer 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 Casio Computer CoLtd, you can compare the effects of market volatilities on Chongqing Machinery and Casio Computer 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 Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Casio Computer.
Diversification Opportunities for Chongqing Machinery and Casio Computer
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and Casio is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Casio Computer go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Casio Computer
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 1.45 times more return on investment than Casio Computer. However, Chongqing Machinery is 1.45 times more volatile than Casio Computer CoLtd. It trades about 0.2 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about -0.05 per unit of risk. If you would invest 7.55 in Chongqing Machinery Electric on October 12, 2024 and sell it today you would earn a total of 0.60 from holding Chongqing Machinery Electric or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Casio Computer CoLtd
Performance |
| Timeline |
| Chongqing Machinery |
| Casio Computer CoLtd |
Chongqing Machinery and Casio Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Casio Computer
The main advantage of trading using opposite Chongqing Machinery and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Casio Computer 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 Casio Computer will offset losses from the drop in Casio Computer's long position.| Chongqing Machinery vs. INSURANCE AUST GRP | Chongqing Machinery vs. Fortescue Metals Group | Chongqing Machinery vs. SIERRA METALS | Chongqing Machinery vs. QBE Insurance Group |
| Casio Computer vs. ARROW ELECTRONICS | Casio Computer vs. STRAYER EDUCATION | Casio Computer vs. Renesas Electronics | Casio Computer vs. Grand Canyon Education |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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