Correlation Between China Communications and VARIOUS EATERIES
Can any of the company-specific risk be diversified away by investing in both China Communications and VARIOUS EATERIES 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 VARIOUS EATERIES 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 VARIOUS EATERIES LS, you can compare the effects of market volatilities on China Communications and VARIOUS EATERIES 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 VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and VARIOUS EATERIES.
Diversification Opportunities for China Communications and VARIOUS EATERIES
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and VARIOUS is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES 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 VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of China Communications i.e., China Communications and VARIOUS EATERIES go up and down completely randomly.
Pair Corralation between China Communications and VARIOUS EATERIES
Assuming the 90 days horizon China Communications Services is expected to generate 1.1 times more return on investment than VARIOUS EATERIES. However, China Communications is 1.1 times more volatile than VARIOUS EATERIES LS. It trades about 0.01 of its potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about -0.17 per unit of risk. If you would invest 51.00 in China Communications Services on October 17, 2024 and sell it today you would earn a total of 0.00 from holding China Communications Services or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
China Communications Services vs. VARIOUS EATERIES LS
Performance |
| Timeline |
| China Communications |
| VARIOUS EATERIES |
China Communications and VARIOUS EATERIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and VARIOUS EATERIES
The main advantage of trading using opposite China Communications and VARIOUS EATERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, VARIOUS EATERIES 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 VARIOUS EATERIES will offset losses from the drop in VARIOUS EATERIES's long position.| China Communications vs. CDL INVESTMENT | China Communications vs. ECHO INVESTMENT ZY | China Communications vs. DIVERSIFIED ROYALTY | China Communications vs. Corsair Gaming |
| VARIOUS EATERIES vs. AEGEAN AIRLINES | VARIOUS EATERIES vs. Southwest Airlines Co | VARIOUS EATERIES vs. China Communications Services | VARIOUS EATERIES vs. TELECOM ITALIA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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