Correlation Between China Changjiang and Solar Alliance
Can any of the company-specific risk be diversified away by investing in both China Changjiang and Solar Alliance 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 Changjiang and Solar Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Changjiang Mining and Solar Alliance Energy, you can compare the effects of market volatilities on China Changjiang and Solar Alliance 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 Changjiang with a short position of Solar Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Changjiang and Solar Alliance.
Diversification Opportunities for China Changjiang and Solar Alliance
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Solar is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Changjiang Mining and Solar Alliance Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Alliance Energy and China Changjiang 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 Changjiang Mining are associated (or correlated) with Solar Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Alliance Energy has no effect on the direction of China Changjiang i.e., China Changjiang and Solar Alliance go up and down completely randomly.
Pair Corralation between China Changjiang and Solar Alliance
Given the investment horizon of 90 days China Changjiang Mining is expected to generate 6.99 times more return on investment than Solar Alliance. However, China Changjiang is 6.99 times more volatile than Solar Alliance Energy. It trades about 0.07 of its potential returns per unit of risk. Solar Alliance Energy is currently generating about 0.01 per unit of risk. If you would invest 1.20 in China Changjiang Mining on December 1, 2024 and sell it today you would lose (1.17) from holding China Changjiang Mining or give up 97.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
China Changjiang Mining vs. Solar Alliance Energy
Performance |
| Timeline |
| China Changjiang Mining |
| Solar Alliance Energy |
China Changjiang and Solar Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Changjiang and Solar Alliance
The main advantage of trading using opposite China Changjiang and Solar Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Changjiang position performs unexpectedly, Solar Alliance 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 Solar Alliance will offset losses from the drop in Solar Alliance's long position.| China Changjiang vs. Bassett Furniture Industries | China Changjiang vs. Kilroy Realty Corp | China Changjiang vs. Hudson Pacific Properties | China Changjiang vs. PennantPark Floating Rate |
| Solar Alliance vs. Aurora Solar Technologies | Solar Alliance vs. Cryptoblox Technologies | Solar Alliance vs. Sun Pacific Holding | Solar Alliance vs. Solar Integrated Roofing |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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