Correlation Between Chongqing Machinery and VELA TECHNOLPLC
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and VELA TECHNOLPLC 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 VELA TECHNOLPLC 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 VELA TECHNOLPLC LS 0001, you can compare the effects of market volatilities on Chongqing Machinery and VELA TECHNOLPLC 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 VELA TECHNOLPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and VELA TECHNOLPLC.
Diversification Opportunities for Chongqing Machinery and VELA TECHNOLPLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chongqing and VELA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and VELA TECHNOLPLC LS 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VELA TECHNOLPLC LS 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 VELA TECHNOLPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VELA TECHNOLPLC LS has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and VELA TECHNOLPLC go up and down completely randomly.
Pair Corralation between Chongqing Machinery and VELA TECHNOLPLC
Assuming the 90 days horizon Chongqing Machinery is expected to generate 1.71 times less return on investment than VELA TECHNOLPLC. But when comparing it to its historical volatility, Chongqing Machinery Electric is 3.02 times less risky than VELA TECHNOLPLC. It trades about 0.06 of its potential returns per unit of risk. VELA TECHNOLPLC LS 0001 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.03 in VELA TECHNOLPLC LS 0001 on October 16, 2024 and sell it today you would earn a total of 0.02 from holding VELA TECHNOLPLC LS 0001 or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. VELA TECHNOLPLC LS 0001
Performance |
| Timeline |
| Chongqing Machinery |
| VELA TECHNOLPLC LS |
Chongqing Machinery and VELA TECHNOLPLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and VELA TECHNOLPLC
The main advantage of trading using opposite Chongqing Machinery and VELA TECHNOLPLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, VELA TECHNOLPLC 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 VELA TECHNOLPLC will offset losses from the drop in VELA TECHNOLPLC's long position.| Chongqing Machinery vs. Corporate Office Properties | Chongqing Machinery vs. Grupo Carso SAB | Chongqing Machinery vs. PLAYMATES TOYS | Chongqing Machinery vs. ePlay Digital |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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