Correlation Between China Marine and Lithium Boron
Can any of the company-specific risk be diversified away by investing in both China Marine and Lithium Boron 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 Marine and Lithium Boron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Marine Food and Lithium Boron Technology, you can compare the effects of market volatilities on China Marine and Lithium Boron 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 Marine with a short position of Lithium Boron. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Marine and Lithium Boron.
Diversification Opportunities for China Marine and Lithium Boron
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Lithium is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Marine Food and Lithium Boron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Boron Technology and China Marine 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 Marine Food are associated (or correlated) with Lithium Boron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Boron Technology has no effect on the direction of China Marine i.e., China Marine and Lithium Boron go up and down completely randomly.
Pair Corralation between China Marine and Lithium Boron
Given the investment horizon of 90 days China Marine Food is expected to under-perform the Lithium Boron. In addition to that, China Marine is 10.46 times more volatile than Lithium Boron Technology. It trades about -0.15 of its total potential returns per unit of risk. Lithium Boron Technology is currently generating about 0.02 per unit of volatility. If you would invest 2,462 in Lithium Boron Technology on November 1, 2024 and sell it today you would earn a total of 181.94 from holding Lithium Boron Technology or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 20.96% |
| Values | Daily Returns |
China Marine Food vs. Lithium Boron Technology
Performance |
| Timeline |
| China Marine Food |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lithium Boron Technology |
China Marine and Lithium Boron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Marine and Lithium Boron
The main advantage of trading using opposite China Marine and Lithium Boron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Marine position performs unexpectedly, Lithium Boron 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 Lithium Boron will offset losses from the drop in Lithium Boron's long position.| China Marine vs. General Mills | China Marine vs. Nestle SA | China Marine vs. Kellanova | China Marine vs. Campbell Soup |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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