Correlation Between Chongqing Machinery and DiamondRock Hospitality
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and DiamondRock Hospitality 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 DiamondRock Hospitality 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 DiamondRock Hospitality, you can compare the effects of market volatilities on Chongqing Machinery and DiamondRock Hospitality 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 DiamondRock Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and DiamondRock Hospitality.
Diversification Opportunities for Chongqing Machinery and DiamondRock Hospitality
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and DiamondRock is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and DiamondRock Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiamondRock Hospitality 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 DiamondRock Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiamondRock Hospitality has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and DiamondRock Hospitality go up and down completely randomly.
Pair Corralation between Chongqing Machinery and DiamondRock Hospitality
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 1.7 times more return on investment than DiamondRock Hospitality. However, Chongqing Machinery is 1.7 times more volatile than DiamondRock Hospitality. It trades about 0.07 of its potential returns per unit of risk. DiamondRock Hospitality is currently generating about 0.03 per unit of risk. If you would invest 2.24 in Chongqing Machinery Electric on September 23, 2024 and sell it today you would earn a total of 5.66 from holding Chongqing Machinery Electric or generate 252.68% 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. DiamondRock Hospitality
Performance |
| Timeline |
| Chongqing Machinery |
| DiamondRock Hospitality |
Chongqing Machinery and DiamondRock Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and DiamondRock Hospitality
The main advantage of trading using opposite Chongqing Machinery and DiamondRock Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, DiamondRock Hospitality 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 DiamondRock Hospitality will offset losses from the drop in DiamondRock Hospitality'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 |
| DiamondRock Hospitality vs. EBRO FOODS | DiamondRock Hospitality vs. alstria office REIT AG | DiamondRock Hospitality vs. Thai Beverage Public | DiamondRock Hospitality vs. CENTURIA OFFICE REIT |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |