Correlation Between CHP and Big Time
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By analyzing existing cross correlation between CHP and Big Time, you can compare the effects of market volatilities on CHP and Big Time 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 CHP with a short position of Big Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHP and Big Time.
Diversification Opportunities for CHP and Big Time
Excellent diversification
The 3 months correlation between CHP and Big is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CHP and Big Time in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Time and CHP 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 CHP are associated (or correlated) with Big Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Time has no effect on the direction of CHP i.e., CHP and Big Time go up and down completely randomly.
Pair Corralation between CHP and Big Time
Assuming the 90 days trading horizon CHP is expected to generate 0.61 times more return on investment than Big Time. However, CHP is 1.64 times less risky than Big Time. It trades about 0.45 of its potential returns per unit of risk. Big Time is currently generating about 0.14 per unit of risk. If you would invest 0.00 in CHP on September 4, 2024 and sell it today you would earn a total of 0.00 from holding CHP or generate 54.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHP vs. Big Time
Performance |
| Timeline |
| CHP |
| Big Time |
CHP and Big Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHP and Big Time
The main advantage of trading using opposite CHP and Big Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHP position performs unexpectedly, Big Time 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 Big Time will offset losses from the drop in Big Time's long position.The idea behind CHP and Big Time 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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