Correlation Between China Communications and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both China Communications and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on China Communications and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and COLUMBIA SPORTSWEAR.
Diversification Opportunities for China Communications and COLUMBIA SPORTSWEAR
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and COLUMBIA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of China Communications i.e., China Communications and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between China Communications and COLUMBIA SPORTSWEAR
Assuming the 90 days horizon China Communications Services is expected to generate 1.42 times more return on investment than COLUMBIA SPORTSWEAR. However, China Communications is 1.42 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.34 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.06 per unit of risk. If you would invest 53.00 in China Communications Services on November 28, 2024 and sell it today you would earn a total of 18.00 from holding China Communications Services or generate 33.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Communications Services vs. COLUMBIA SPORTSWEAR
Performance |
Timeline |
China Communications |
COLUMBIA SPORTSWEAR |
China Communications and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Communications and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite China Communications and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.China Communications vs. Playtech plc | China Communications vs. ASPEN TECHINC DL | China Communications vs. BioNTech SE | China Communications vs. FARO TECHNOLOGIES |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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