Correlation Between China Finance and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both China Finance and Arrow Electronics 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 Finance and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Finance and Arrow Electronics, you can compare the effects of market volatilities on China Finance and Arrow Electronics 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 Finance with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Finance and Arrow Electronics.
Diversification Opportunities for China Finance and Arrow Electronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Arrow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Finance and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and China Finance 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 Finance are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of China Finance i.e., China Finance and Arrow Electronics go up and down completely randomly.
Pair Corralation between China Finance and Arrow Electronics
Given the investment horizon of 90 days China Finance is expected to generate 183.75 times more return on investment than Arrow Electronics. However, China Finance is 183.75 times more volatile than Arrow Electronics. It trades about 0.22 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.19 per unit of risk. If you would invest 0.00 in China Finance on October 31, 2024 and sell it today you would earn a total of 0.00 from holding China Finance or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Finance vs. Arrow Electronics
Performance |
| Timeline |
| China Finance |
| Arrow Electronics |
China Finance and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Finance and Arrow Electronics
The main advantage of trading using opposite China Finance and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Finance position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| China Finance vs. Weibo Corp | China Finance vs. KVH Industries | China Finance vs. Modine Manufacturing | China Finance vs. Sphere Entertainment Co |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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