Correlation Between City Of and China Communications
Can any of the company-specific risk be diversified away by investing in both City Of and China Communications 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 City Of and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The City of and China Communications Services, you can compare the effects of market volatilities on City Of and China Communications 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 City Of with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Of and China Communications.
Diversification Opportunities for City Of and China Communications
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between City and China is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding The City of and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and City Of 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 The City of are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of City Of i.e., City Of and China Communications go up and down completely randomly.
Pair Corralation between City Of and China Communications
Assuming the 90 days horizon The City of is expected to under-perform the China Communications. But the stock apears to be less risky and, when comparing its historical volatility, The City of is 1.56 times less risky than China Communications. The stock trades about -0.02 of its potential returns per unit of risk. The China Communications Services is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 47.00 in China Communications Services on August 30, 2024 and sell it today you would earn a total of 1.00 from holding China Communications Services or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
The City of vs. China Communications Services
Performance |
| Timeline |
| The City |
| China Communications |
City Of and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Of and China Communications
The main advantage of trading using opposite City Of and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Of position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| City Of vs. Cleanaway Waste Management | City Of vs. MeVis Medical Solutions | City Of vs. National Beverage Corp | City Of vs. Tsingtao Brewery |
| China Communications vs. AVITA Medical | China Communications vs. TRADEGATE | China Communications vs. Merit Medical Systems | China Communications vs. SAFETY MEDICAL PROD |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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