Correlation Between CHII and CHIX
Can any of the company-specific risk be diversified away by investing in both CHII and CHIX 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 CHII and CHIX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHII and CHIX, you can compare the effects of market volatilities on CHII and CHIX 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 CHII with a short position of CHIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHII and CHIX.
Diversification Opportunities for CHII and CHIX
Pay attention - limited upside
The 3 months correlation between CHII and CHIX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHII and CHIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIX and CHII 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 CHII are associated (or correlated) with CHIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIX has no effect on the direction of CHII i.e., CHII and CHIX go up and down completely randomly.
Pair Corralation between CHII and CHIX
If you would invest 1,172 in CHIX on August 31, 2024 and sell it today you would earn a total of 0.00 from holding CHIX or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
CHII vs. CHIX
Performance |
| Timeline |
| CHII |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CHIX |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CHII and CHIX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHII and CHIX
The main advantage of trading using opposite CHII and CHIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHII position performs unexpectedly, CHIX 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 CHIX will offset losses from the drop in CHIX's long position.The idea behind CHII and CHIX pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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