Correlation Between Chongqing Machinery and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Thai Beverage 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 Thai Beverage 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 Thai Beverage Public, you can compare the effects of market volatilities on Chongqing Machinery and Thai Beverage 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 Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Thai Beverage.
Diversification Opportunities for Chongqing Machinery and Thai Beverage
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chongqing and Thai is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public 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 Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Thai Beverage go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Thai Beverage
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 1.84 times more return on investment than Thai Beverage. However, Chongqing Machinery is 1.84 times more volatile than Thai Beverage Public. It trades about 0.08 of its potential returns per unit of risk. Thai Beverage Public is currently generating about -0.05 per unit of risk. If you would invest 7.90 in Chongqing Machinery Electric on October 21, 2024 and sell it today you would earn a total of 0.50 from holding Chongqing Machinery Electric or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Thai Beverage Public
Performance |
| Timeline |
| Chongqing Machinery |
| Thai Beverage Public |
Chongqing Machinery and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Thai Beverage
The main advantage of trading using opposite Chongqing Machinery and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Thai Beverage 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 Thai Beverage will offset losses from the drop in Thai Beverage's long position.| Chongqing Machinery vs. Vienna Insurance Group | Chongqing Machinery vs. Air Transport Services | Chongqing Machinery vs. Yuexiu Transport Infrastructure | Chongqing Machinery vs. Liberty Broadband |
| Thai Beverage vs. EAT WELL INVESTMENT | Thai Beverage vs. Sumitomo Mitsui Construction | Thai Beverage vs. Chongqing Machinery Electric | Thai Beverage vs. PennantPark Investment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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