Correlation Between Chongqing Machinery and CEOTRONICS
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and CEOTRONICS 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 CEOTRONICS 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 CEOTRONICS, you can compare the effects of market volatilities on Chongqing Machinery and CEOTRONICS 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 CEOTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and CEOTRONICS.
Diversification Opportunities for Chongqing Machinery and CEOTRONICS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and CEOTRONICS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS 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 CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and CEOTRONICS go up and down completely randomly.
Pair Corralation between Chongqing Machinery and CEOTRONICS
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 2.26 times more return on investment than CEOTRONICS. However, Chongqing Machinery is 2.26 times more volatile than CEOTRONICS. It trades about 0.07 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.05 per unit of risk. If you would invest 2.17 in Chongqing Machinery Electric on September 12, 2024 and sell it today you would earn a total of 6.48 from holding Chongqing Machinery Electric or generate 298.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. CEOTRONICS
Performance |
| Timeline |
| Chongqing Machinery |
| CEOTRONICS |
Chongqing Machinery and CEOTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and CEOTRONICS
The main advantage of trading using opposite Chongqing Machinery and CEOTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, CEOTRONICS 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 CEOTRONICS will offset losses from the drop in CEOTRONICS'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 |
| CEOTRONICS vs. Nok Airlines PCL | CEOTRONICS vs. Sekisui Chemical Co | CEOTRONICS vs. URBAN OUTFITTERS | CEOTRONICS vs. Nissan Chemical Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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