Correlation Between China Communications and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both China Communications and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS, you can compare the effects of market volatilities on China Communications and EBRO FOODS 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 EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and EBRO FOODS.
Diversification Opportunities for China Communications and EBRO FOODS
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and EBRO is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS 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 EBRO FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBRO FOODS has no effect on the direction of China Communications i.e., China Communications and EBRO FOODS go up and down completely randomly.
Pair Corralation between China Communications and EBRO FOODS
Assuming the 90 days horizon China Communications Services is expected to generate 1.78 times more return on investment than EBRO FOODS. However, China Communications is 1.78 times more volatile than EBRO FOODS. It trades about 0.28 of its potential returns per unit of risk. EBRO FOODS is currently generating about 0.0 per unit of risk. If you would invest 47.00 in China Communications Services on September 14, 2024 and sell it today you would earn a total of 4.00 from holding China Communications Services or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. EBRO FOODS
Performance |
| Timeline |
| China Communications |
| EBRO FOODS |
China Communications and EBRO FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and EBRO FOODS
The main advantage of trading using opposite China Communications and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, EBRO FOODS 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 EBRO FOODS will offset losses from the drop in EBRO FOODS's long position.| China Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |