Correlation Between Chow Tai and Burberry Group
Can any of the company-specific risk be diversified away by investing in both Chow Tai and Burberry Group 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 Chow Tai and Burberry Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chow Tai Fook and Burberry Group Plc, you can compare the effects of market volatilities on Chow Tai and Burberry Group 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 Chow Tai with a short position of Burberry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chow Tai and Burberry Group.
Diversification Opportunities for Chow Tai and Burberry Group
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chow and Burberry is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chow Tai Fook and Burberry Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burberry Group Plc and Chow Tai 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 Chow Tai Fook are associated (or correlated) with Burberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burberry Group Plc has no effect on the direction of Chow Tai i.e., Chow Tai and Burberry Group go up and down completely randomly.
Pair Corralation between Chow Tai and Burberry Group
Assuming the 90 days horizon Chow Tai is expected to generate 3.34 times less return on investment than Burberry Group. But when comparing it to its historical volatility, Chow Tai Fook is 1.58 times less risky than Burberry Group. It trades about 0.15 of its potential returns per unit of risk. Burberry Group Plc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,198 in Burberry Group Plc on November 3, 2024 and sell it today you would earn a total of 262.00 from holding Burberry Group Plc or generate 21.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chow Tai Fook vs. Burberry Group Plc
Performance |
| Timeline |
| Chow Tai Fook |
| Burberry Group Plc |
Chow Tai and Burberry Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chow Tai and Burberry Group
The main advantage of trading using opposite Chow Tai and Burberry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chow Tai position performs unexpectedly, Burberry Group 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 Burberry Group will offset losses from the drop in Burberry Group's long position.| Chow Tai vs. Prada Spa PK | Chow Tai vs. Christian Dior SE | Chow Tai vs. Kering SA | Chow Tai vs. Christian Dior SE |
| Burberry Group vs. Compagnie Financiere Richemont | Burberry Group vs. Hermes International SA | Burberry Group vs. Prada Spa PK | Burberry Group vs. Swatch Group AG |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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