Correlation Between China Longyuan and China Intel
Can any of the company-specific risk be diversified away by investing in both China Longyuan and China Intel 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 Longyuan and China Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Longyuan Power and China Intel Info, you can compare the effects of market volatilities on China Longyuan and China Intel 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 Longyuan with a short position of China Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and China Intel.
Diversification Opportunities for China Longyuan and China Intel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and China is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power and China Intel Info in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Intel Info and China Longyuan 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 Longyuan Power are associated (or correlated) with China Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Intel Info has no effect on the direction of China Longyuan i.e., China Longyuan and China Intel go up and down completely randomly.
Pair Corralation between China Longyuan and China Intel
Assuming the 90 days horizon China Longyuan Power is expected to under-perform the China Intel. But the pink sheet apears to be less risky and, when comparing its historical volatility, China Longyuan Power is 20.63 times less risky than China Intel. The pink sheet trades about -0.02 of its potential returns per unit of risk. The China Intel Info is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2.86 in China Intel Info on November 19, 2024 and sell it today you would lose (2.16) from holding China Intel Info or give up 75.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
China Longyuan Power vs. China Intel Info
Performance |
| Timeline |
| China Longyuan Power |
| China Intel Info |
China Longyuan and China Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and China Intel
The main advantage of trading using opposite China Longyuan and China Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan position performs unexpectedly, China Intel 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 Intel will offset losses from the drop in China Intel's long position.| China Longyuan vs. Clearway Energy | China Longyuan vs. Brookfield Renewable Corp | China Longyuan vs. Brookfield Renewable Partners | China Longyuan vs. Clearway Energy Class |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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