Correlation Between Chongqing Machinery and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and DICKS Sporting 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 DICKS Sporting 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 DICKS Sporting Goods, you can compare the effects of market volatilities on Chongqing Machinery and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and DICKS Sporting.
Diversification Opportunities for Chongqing Machinery and DICKS Sporting
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chongqing and DICKS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and DICKS Sporting go up and down completely randomly.
Pair Corralation between Chongqing Machinery and DICKS Sporting
Assuming the 90 days horizon Chongqing Machinery is expected to generate 4.35 times less return on investment than DICKS Sporting. But when comparing it to its historical volatility, Chongqing Machinery Electric is 1.37 times less risky than DICKS Sporting. It trades about 0.05 of its potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 18,764 in DICKS Sporting Goods on August 30, 2024 and sell it today you would earn a total of 2,086 from holding DICKS Sporting Goods or generate 11.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. DICKS Sporting Goods
Performance |
| Timeline |
| Chongqing Machinery |
| DICKS Sporting Goods |
Chongqing Machinery and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and DICKS Sporting
The main advantage of trading using opposite Chongqing Machinery and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.| Chongqing Machinery vs. ABB | Chongqing Machinery vs. Superior Plus Corp | Chongqing Machinery vs. NMI Holdings | Chongqing Machinery vs. SIVERS SEMICONDUCTORS AB |
| DICKS Sporting vs. Superior Plus Corp | DICKS Sporting vs. NMI Holdings | DICKS Sporting vs. SIVERS SEMICONDUCTORS AB | DICKS Sporting vs. Talanx AG |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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