Correlation Between Chongqing Machinery and US Physical
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and US Physical 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 US Physical 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 US Physical Therapy, you can compare the effects of market volatilities on Chongqing Machinery and US Physical 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 US Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and US Physical.
Diversification Opportunities for Chongqing Machinery and US Physical
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and UPH is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and US Physical Therapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Physical Therapy 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 US Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Physical Therapy has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and US Physical go up and down completely randomly.
Pair Corralation between Chongqing Machinery and US Physical
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 3.09 times more return on investment than US Physical. However, Chongqing Machinery is 3.09 times more volatile than US Physical Therapy. It trades about 0.06 of its potential returns per unit of risk. US Physical Therapy is currently generating about 0.01 per unit of risk. If you would invest 2.44 in Chongqing Machinery Electric on October 11, 2024 and sell it today you would earn a total of 5.46 from holding Chongqing Machinery Electric or generate 223.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. US Physical Therapy
Performance |
| Timeline |
| Chongqing Machinery |
| US Physical Therapy |
Chongqing Machinery and US Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and US Physical
The main advantage of trading using opposite Chongqing Machinery and US Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, US Physical 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 US Physical will offset losses from the drop in US Physical's long position.| Chongqing Machinery vs. Superior Plus Corp | Chongqing Machinery vs. NMI Holdings | Chongqing Machinery vs. SIVERS SEMICONDUCTORS AB | Chongqing Machinery vs. Talanx AG |
| US Physical vs. NetSol Technologies | US Physical vs. Playtech plc | US Physical vs. Kingdee International Software | US Physical vs. SPORTING |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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