Correlation Between China Gas and Joint Stock
Can any of the company-specific risk be diversified away by investing in both China Gas and Joint Stock 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 China Gas and Joint Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Gas Holdings and Joint Stock, you can compare the effects of market volatilities on China Gas and Joint Stock 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 China Gas with a short position of Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Gas and Joint Stock.
Diversification Opportunities for China Gas and Joint Stock
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Joint is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding China Gas Holdings and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock and China Gas 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 China Gas Holdings are associated (or correlated) with Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of China Gas i.e., China Gas and Joint Stock go up and down completely randomly.
Pair Corralation between China Gas and Joint Stock
Assuming the 90 days horizon China Gas Holdings is expected to under-perform the Joint Stock. In addition to that, China Gas is 1.16 times more volatile than Joint Stock. It trades about -0.4 of its total potential returns per unit of risk. Joint Stock is currently generating about -0.05 per unit of volatility. If you would invest 10,835 in Joint Stock on September 4, 2024 and sell it today you would lose (218.00) from holding Joint Stock or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Gas Holdings vs. Joint Stock
Performance |
| Timeline |
| China Gas Holdings |
| Joint Stock |
China Gas and Joint Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Gas and Joint Stock
The main advantage of trading using opposite China Gas and Joint Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Gas position performs unexpectedly, Joint Stock 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 Joint Stock will offset losses from the drop in Joint Stock's long position.| China Gas vs. TechnipFMC PLC | China Gas vs. Deckers Outdoor | China Gas vs. Jackson Financial | China Gas vs. OppFi Inc |
| Joint Stock vs. Mativ Holdings | Joint Stock vs. Avient Corp | Joint Stock vs. Eastman Chemical | Joint Stock vs. Ecoloclean Industrs |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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