Correlation Between China Communications and Diös Fastigheter
Can any of the company-specific risk be diversified away by investing in both China Communications and Diös Fastigheter 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 Diös Fastigheter 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 Dis Fastigheter AB, you can compare the effects of market volatilities on China Communications and Diös Fastigheter 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 Diös Fastigheter. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Diös Fastigheter.
Diversification Opportunities for China Communications and Diös Fastigheter
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Diös is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Dis Fastigheter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dis Fastigheter AB 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 Diös Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dis Fastigheter AB has no effect on the direction of China Communications i.e., China Communications and Diös Fastigheter go up and down completely randomly.
Pair Corralation between China Communications and Diös Fastigheter
Assuming the 90 days horizon China Communications Services is expected to generate 2.49 times more return on investment than Diös Fastigheter. However, China Communications is 2.49 times more volatile than Dis Fastigheter AB. It trades about 0.06 of its potential returns per unit of risk. Dis Fastigheter AB is currently generating about 0.05 per unit of risk. If you would invest 22.00 in China Communications Services on October 24, 2024 and sell it today you would earn a total of 31.00 from holding China Communications Services or generate 140.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
China Communications Services vs. Dis Fastigheter AB
Performance |
| Timeline |
| China Communications |
| Dis Fastigheter AB |
China Communications and Diös Fastigheter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Diös Fastigheter
The main advantage of trading using opposite China Communications and Diös Fastigheter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Diös Fastigheter 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 Diös Fastigheter will offset losses from the drop in Diös Fastigheter's long position.| China Communications vs. WT OFFSHORE | China Communications vs. X FAB Silicon Foundries | China Communications vs. Siamgas And Petrochemicals | China Communications vs. Mitsubishi Gas Chemical |
| Diös Fastigheter vs. Webster Financial | Diös Fastigheter vs. Ameriprise Financial | Diös Fastigheter vs. PNC Financial Services | Diös Fastigheter vs. COLUMBIA SPORTSWEAR |
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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