Correlation Between Chongqing Machinery and Dolly Varden
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Dolly Varden 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 Dolly Varden 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 Dolly Varden Silver, you can compare the effects of market volatilities on Chongqing Machinery and Dolly Varden 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 Dolly Varden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Dolly Varden.
Diversification Opportunities for Chongqing Machinery and Dolly Varden
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chongqing and Dolly is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver 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 Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Dolly Varden go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Dolly Varden
Assuming the 90 days horizon Chongqing Machinery is expected to generate 1.03 times less return on investment than Dolly Varden. But when comparing it to its historical volatility, Chongqing Machinery Electric is 1.45 times less risky than Dolly Varden. It trades about 0.05 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 56.00 in Dolly Varden Silver on September 23, 2024 and sell it today you would earn a total of 3.00 from holding Dolly Varden Silver or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Dolly Varden Silver
Performance |
| Timeline |
| Chongqing Machinery |
| Dolly Varden Silver |
Chongqing Machinery and Dolly Varden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Dolly Varden
The main advantage of trading using opposite Chongqing Machinery and Dolly Varden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Dolly Varden 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 Dolly Varden will offset losses from the drop in Dolly Varden's long position.| Chongqing Machinery vs. Honeywell International | Chongqing Machinery vs. Schneider Electric SE | Chongqing Machinery vs. Illinois Tool Works | Chongqing Machinery vs. Eaton PLC |
| Dolly Varden vs. Sumitomo Mitsui Construction | Dolly Varden vs. Chongqing Machinery Electric | Dolly Varden vs. TITAN MACHINERY | Dolly Varden vs. H FARM SPA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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