Correlation Between China Communications and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both China Communications and INVITATION HOMES 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 Communications and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and INVITATION HOMES DL, you can compare the effects of market volatilities on China Communications and INVITATION HOMES 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 Communications with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and INVITATION HOMES.
Diversification Opportunities for China Communications and INVITATION HOMES
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and INVITATION is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and China Communications 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 Communications Services are associated (or correlated) with INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of China Communications i.e., China Communications and INVITATION HOMES go up and down completely randomly.
Pair Corralation between China Communications and INVITATION HOMES
Assuming the 90 days horizon China Communications Services is expected to generate 4.96 times more return on investment than INVITATION HOMES. However, China Communications is 4.96 times more volatile than INVITATION HOMES DL. It trades about 0.08 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.01 per unit of risk. If you would invest 19.00 in China Communications Services on November 9, 2024 and sell it today you would earn a total of 34.00 from holding China Communications Services or generate 178.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. INVITATION HOMES DL
Performance |
| Timeline |
| China Communications |
| INVITATION HOMES |
China Communications and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and INVITATION HOMES
The main advantage of trading using opposite China Communications and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| China Communications vs. MAG SILVER | China Communications vs. Penn National Gaming | China Communications vs. Globex Mining Enterprises | China Communications vs. GameStop Corp |
| INVITATION HOMES vs. Highlight Communications AG | INVITATION HOMES vs. Rocket Internet SE | INVITATION HOMES vs. INTERNET INJPADR 1 | INVITATION HOMES vs. GMO Internet |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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